analysis of investors preference towards investment avenues
Short Description
sip project gtu...
Description
A Project Report On
“An Analysis of Investor’s preference towards Investment Avenues” At
In par tial fulfilment of the re quirements of Summ er Internship Programme in the Masters in Business Administration programme of Gujarat Technological University
Submitted to: Prof. Amish Soni
By Amitkumar Patel: 137350592010 Naineel D esai: 13 7350592091 Batch: 2013-15
N R INSTITUTE OF BUSINESS MANAGEMENT
N. R. Institute of Business Management (GLS-MBA)
Certificate This is to certify that Mr. Amitkumar Patel Enrolment No. 137350592010 and Mr. Naineel Desai Enrolment No. 137350592091 students of N. R. Institute of Business Management (GLS-MBA) has successfully completed his Summer Project on at
in partial fulfillment of the
requirements of MBA programme of Gujarat Technological University. This is his srcinal work and has not been submitted elsewhere.
_______________
Dr. Hitesh Ruparel Director Date: _________________
Place: _________________
____________________
Prof. Amish Soni
Declaration We, Amitkumar Patel Enrolment No.137050592010 and Mr. Naineel Desai Enrolment No. 137350592091 students of N R Institute of Business Management hereby declare that we have successfully completed this project on ‘ in the academic year 2014-15. We declare that this submitted work is done by us and to the best of our knowledge; no such work has been submitted by any other person for the award of degree or diploma. We also declare that all the information collected from various secondary and primary sources has been duly acknowledged in this project report.
Amitkumar Patel 137350592010
Naineel Desai 137350592091
Preface Today’s modern world is progressing by leaps and bounds. In this fast changing world, management of business is very important phase. The training of a management student plays a vital role in developing him as a well groomed professional. It allows a student to apply the theoretical concepts in the actual corporate world. It gives the student an idea of dynamic and versatile professional world as well as exposure to intricacies and complexities of corporate world. We got the opportunity to make summer internship project on“Analysis about Investor’s Preference towards Investment Avenues”. This project report gives details about common people behaviour towards investment avenues available in the financial market. It also describes the awareness of investors towards investment avenues available to them.
VI
Acknowledgement “The success of any person is not only his hard work, but it is also the support and co-operation one gets for success.” Apart from individual efforts, the success of any project depends largely on encouragement and guidelines of many others. We take privilege of thanking our respected director sir Dr. Hitesh Ruparel. We take this opportunity to express our profound gratitude and deep regards to our guide prof. Amish Soni for his exemplary guidance, monitoring and constant encouragement throughout the course of this project. The help and guidance given by him time to time shall carry us a long way in the journey of life on which we are about to embark. We also take this opportunity to express a deep sense of gratitude to Mr. Munaf Kadri, Area Sales Manager of Sharekhan ltd. for his cordial support, valuable information and guidance, which helped us in completing this task through various stages. We are obliged to staff members of Sharekhan ltd. for the valuable information provided by them in their respective fields. We are grateful for their cooperation during the period of our internship. We express our sincere thanks to all!
VII
Executive summary Savings form an important part of the economy of any nation. With the savings invested in various options available to the people, the money acts as the driver for growth of the country. Indian financial scene too presents a plethora of avenues to the investors. Though certainly not the best or deepest of markets in the world, it has reasonable options for an ordinary man to invest his savings. The money you earn is partly spent and the rest saved for meeting future expenses. Instead of keeping the savings idle you may like to use savings in order to get return on it in the future. This is called Investment. One needs to invest to and earn return on your idle resources and generate a specified sum of money for a specific goal in life and make a provision for an uncertain future One of the important reasons why one needs to invest wisely is to meet the cost of Inflation. Inflation is the rate at which the cost of living increases. The cost of living is simply what it costs to buy the goods and services you need to live. Inflation causes money to lose value because it will not buy the same amount of a good or service in the future as it does now or did in the past. The sooner one starts investing the better. By investing early you allow your investments more time to grow, whereby the concept of compounding increases your income, by accumulating the principal and the interest or dividend earned on it, year after year.
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TABLE OF CONTENTS
Sr.No.
T op i c s
Chapter-1
Research Methodology
1
1.1
Problem statement
2
1.2
Need for study
2
1.3
Objectives of study
2
1.4
Scope of study
3
1.5
Research design
5
1.6
Sampling
6
1.7
Data collection and sources
7
1.8
Beneficiaries of study
8
1.9
Limitations of study
9
1.10
Literature review
10
Industry profile
12
2.1
History of stock market in India
13
2.2
Stock markets in India
15
2.3
Regulatory authority
17
2.4
Online trading industry – India
20
2.5
Various stock exchanges in India
20
2.6
Market participants
29
2.7
Relation of the stock market to the modern financial
29
Chapter-2
Pageno.
system 2.8
Clearing and settlement agent
30
2.9
Swot analysis of Indian stock market
31
Company profile
33
Chapter-3 3.1
Introduction
3.2
Profileofthecompany
34
3.3
Board of directors
3.4
Brand name
3.5
Mission
38
3.6
Vision
38
36 38 38
IX
3.7
Achievementsofsharekhan
39
3.8
Sharekhan ltd. Provide different product as follows
39
3.9
Servicesprovidedbysharekhan
3.10
Types of account
40
3.11
SWOTanalysisof sharekhan
3.12
Competitorsofsharekhanltd
3.13
Portfoliomanagementservices
3.14
Charge structure
47
3.15
Requirementsfornettrading
48
3.16
Procedurefornettrading
3.17
Tradingand settlementat sharekhan
3.18
Trading procedure at share khan stock broking
3.19
Problem areas
61
3.20
Swotanalysisofsharekhan
63
41 44 44 45
49 54 54
Introduction of the topic
64
4.1
Introduction of investment
65
4.2 4.3
Different investment alternatives in India Investment avenues
65 65
Data analysis and interpretation
67
Hypothesis analysis( Chi Square test )
90
Chapter-7
Findings
102
Chapter-8
Suggestion
104
Chapter-9
Conclusion
106
Bibliography
108
Annexure
110
Chapter-4
Chapter-5
X
LIST OF TABLES SR.NO
PARTICULARS
PG.NO
1
Age respondent of
2
Genderof respondent
3
Occupationofrespondent
4
Annualincomeofrespondent
5
Marital status
6
No. of family members
73
7
No. of earning members
74
8
Respondentinvestornot?
9
Segment of investment
10
Growthrateofinvestment
11
Howfrequentdoyouinvest?
12
What%ofannualincomedoyouinvest?
13
Sources of information
14
Factorsconsideredbeforeinvesting
81
15
Optimum strategy
82
16
Doyouhaveanyotherinvestmentpolicy?
17
Satisfactionwithreturngenerated
85
18
Satisfactionwithfactorsconsidered
86
19
Awarenessregardingvariousbrokers
87
20
Whatismoreimportantin broking?
21
Willyouinvestinfuture?
SR.NO
68 69 70 71 72
75 76 77 78 79 80
84
88 89
Hypothesis analysis
PG.NO
1
Relationbetweena geandinvestmentplan
90
2
Relation between gender and investment plan.
92
3
Relation between occupation and investment plan.
4
Relation between occupation and any percent of annual
94 96
income invest in share Market. 6
Relation between age and optimum strategy’s
XI
100
LIST OF CHART SR.NO
PARTICULARS
PG.NO
1
Age respondent of
68
2
Genderof respondent
3
Occupationofrespondent
4
Annualincomeofrespondent
71
5
Marital status
72
6
No. of family members
7
No. of earning members
8
Respondentinvestornot?
9
Segment ofinvestment
10
Growthrateofinvestment
11
Howfrequentdoyouinvest?
12
What%ofannualincomedoyouinvest?
13
Sources of information
14
Factorsconsideredbeforeinvesting
81
15
Optimum strategy
83
16
Doyouhaveanyotherinvestmentpolicy?
17
Satisfactionwithreturngenerated
85
18
Satisfactionwithfactorsconsidered
86
19
Awarenessregardingvariousbrokers
87
20
Whatismoreimportantinbroking?
88
21
Will youinvestinfuture?
89
69 70
73 74 75 76 77 78 79 80
XII
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1
RESEARCH METHODOLOGY 1. Problem Statement
In market there are many investment options available for the investors so we tried to find out how they invest or choose a particular opti on and what factors they consid er while investing . Also we tried to identify the investors perception and their risk taking ability while investing
in different products of market. Hence this study entitled “Analysis about investors prefere nce towards various investment Avenues” has been taken up. 2. Need for the Study
To study the perception of the people about investment of their saving.
To understand the basic requirement of the common man and their views towards investment.
3 Objectives of the Study Primary objectives
1. The main objective of our project is to study investors preferences regarding investments and to find out the need of the current and future investors. 2. To know the preferred investment avenues and key factors those are considered by individual investor before investing in Gujarat. 3. To get the knowledge and examine the problem about available avenues for investment.
Secondary objectives
1. To identify the preferred sources of information influencing investment decisions and find out the most preferable investment option.
2. To know regarding awareness of various investment modes among an individual. 3. To know the risk tolerance level of the individual investor. 4. To study different kinds of risks involved in investments. 5. To understand investment patterns of investors.
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4. Scope of the s tudy
Investment has been subjected to speculations and inefficiencies, which are beached to the rationality of th e investor. Traditional finance theory is base d on two assum ptions. Firstly, investors make rational decisions; and secondly investors are unbiased in their pr edictions about future return of the stock. However financial economists have now realised that the long held assumptions of traditional fin ance theory are wro ng and found that investors can be irrational and make predictable errors about the return on investment on their investments. This analysis on individual investors behaviour is an attempt to know the profile of the investor and also know the characteristic of the investors so as to know their preference with respect to their investments. The study also tries to unravel the influence of demographic factors like age on risk tolerance level of investor. The purpose of the study is to determine the saving behaviour and investment preferences of customers. Customer perception will provide a way to accurately measure how the customers invest in various alternatives. 5. Research desig n
A research design is purely and simply the framework of plan that guides the collection and analysis of data. The study is intended to find the investors preference towards various investment avenues. The study design is Descriptive in nature. Descriptive research is a fact find ing investigation with adequate interpretation. It is the simplest type of research and is more specific. Mainly designed to gather descriptive information and provides information for formulating more sophisticated studies. 6. Sampling Sampling techniques
Convenience sampling technique will be used for collecting the data from different investors. The investors are selected by the convenience sampling method. The selection of units from the population based on their easy availabi lity and accessibil ity to the researcher is known as convenience sampling. Sampling size
The population being large the survey is carried among 200 customers. They will be considered adequate to represent the characteristics of the entire population.
3
Sampling unit
The respondents who will be asked to fill out the questionnaire are the sampling unit. These comprise of employees of companies, self employed, professionals, govt employees, and other investors. Sampling area
The sampling area is Ahmadabad. Hypothesis
Hypothesis is a hunch, assumption, suspicion, assertion or an idea about a phenomenon, relationship or situation, th e reality or truth of which one do not know. A resear cher calls this assumption a hypothesis and they become the basis of an enquiry . Null hypo thesis: It is denoted by H0 Alternative hypothesis: it is denoted by H1
In this project we have shown five different hypotheses. They are as follows: 1:-Relation between age and investment plan
H0: age is not related to any investment plan. H1: age is related to any investment plan. 2:-Relation between gender and investment plan.
H0: gender is not related to any investment plan. H1: gender is related to any investment plan. 3:-Relation between occupation and investment plan.
H0: occupation is not related to any investment plan. H1: occupation is related to any investment plan. 4:- Relation between oc cupation and any per cent of annu al income inv est in share market.
H0: occupation is not related to any percent of annual income invest in share market. H1: occupation is related to any percent of annual income invest in share market. 5:- Relation between oc cupation and any per cent of annu al income inv est in share market.
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H0: annual income is not relat ed to any percent of annual income invest in share marke t. H1: annual income is related to any percent of annual income invest in share market. 6:- Relation between age and optim um strategy.
H0: age is not related to any optimum strategy H1: age is related to any optimum strategy. 7. Data collection and sources
Market research requires two kinds of data primary data and secondary data. Primary data
The data, which is collected for the first time, directly from respondents to the base of knowledge & belief of the research, are called primary data. A questionnaire schedule is prepared and primary data is collected through survey method. Secondary data
When data are collected & compiled in a published nature, it is called secondary data. So far as this research is concerned, books, related information from internet, customer database & many magazines and the brochures have been referred as secondary data. Secondary data is any data gathered earlier for some other purpose & available hand in carrying out project. 8. Beneficiaries of study
1. Student will get knowledge about financial market in India and how it works. 2. Study will get to know which instrument gives maximum returns and what kind of risk involves in it. 3. From this report company will come to know that what consumer exactly wants from their investment. 4. We have called many people in tele-calling which is my first time experience. 5. We have also learned about the offer provide for franchisee and what are their terms and condition for franchisee. 6. We learned about the equity, commodity, mutual fund & life insurance which is important tools investment.
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7. We also learned that how equity and commodity market works and which are the factors affecting to them. 9. Limitations of the study
1. The lack of knowledge of customers about the instruments can be a major limitation. 2. The information can be bia sed due to use of que stionnaire. 3. The researcher can concentrate only on Gujarat investors. 4. There will be different perception of investors in different cities, which will not be covered due to time and financial limitations. 5. The information provided by the respondents is spontaneous and they may not be consistent. 10. Literature review A P Pati and D. Shome in their article “Do Households Still Prefer Bank Deposits? An
Analysis of shift in Savings and Savings Determinants” Published in The IUP Journal of Bank Management, Feb-2011 concluded that Financial reforms have, in the recent years, opened up several avenues for the households for savings. The 8 study suggest that despite the reform, households are still preferring the safe channels of bank deposit schemes rather than switching over to high yielding but risky channels of savings. However, between the two phases (pre- and post-liberalization period) a significant structural shift of savings in bank deposit is observed. Variables like income and inflation are found to be statistically significant determinants of savings in bank deposit. Source:http://econpapers.repec.org/article/icficfjbm/v_3a10_3ay_3a2011_3ai_3a1_3ap_3a46-59.htm
A. Lalitha and M. Surekha in their article “Retail Investor in Indian Capital Market :
Profile, Pattern of Investment and Profitability” published in The Indian journal of
commerce, July-September 2008 conclu ded that the retail inves tor is here to stay and the capital markets may well emerge as strong contenders for traditional investment avenues like bank/post office deposits. They also focused on investors education and investment decision of retail investors. Alex Wang in his article “Younger Generations Investing Behaviours in Mutual
Funds: Does Gender Matter?” published in The Journal of Wealth Management, Spring
2011 concluded that
knowledge, experience, and income are important factors that
influence younger generations investing behaviours in mutual funds. Moreover, gender
6
emerges as the most important factor that differentiates younger generations investing behaviours in mutual funds. Wealth advisors are also urged to consider helping their clients manage their wealth by being aware of gender-predicted differences in client situations. http://www.iijournals.com/doi/abs/10.3905/jwm.2011.13.4.013
Charlotte B. Beyer in his article “Investor Education: Whats Broken and How to Fix It”
published in The Jou rnal of Wealth Management, Summer 2010 In this article, the author argues that the traditional approach to investor education has failed and that radical reform is needed. After observing how one group of investor s learned far more in experiential settings, the author submits that these investors might be convincing proof that experiential investor education is su perior.
Signalling
good news for th e
investment advisory industry, the hiring, use, and retention of advisors by these same better-educated investors is stable. This group also expressed positive views of how well served they are by the industry ove rall. While the ultra-wealthy arguably might have easier access to superior advisors, the author believes that overhauling investor education will benefit all investors, not just the wealthiest. http://www.iijournals.com/doi/abs/10.3905/JWM.2010.13.1.011
Gupta L.C. & Jain in their article “The Changing Investment Preferences o f Indian
Households” survey 2008, conducted by society for capital market research and development, new Delhi. Pointed out that ‘too much volatility, ‘too much price manipulation, ‘unfair practices of brokers and
‘corporate mismanagement and frauds
as the main worries of investors. http://www.scmrd.org/Published%20Studies.htm
Joseph Anbarasu D, Clifford Paul S and Annette B in their article “An Empirical
Study on Some Demographic Characteristics of Investors and its Impact on Pattern of their Savings and Risk Coverage Through Insurance Schemes” published in The IUP Journal of
Risk & Insurance, January 2011 concluded that The saving pattern of the people is crucial to the government in designing policies to promote savings and investment. Their study reveals that
the people are aware about
the
importance of saving, but
the awareness about
investment opportunities is low. Steps have to be taken by the government and private companies to increase the awareness by advertising campaigns. Investment companies need to offer schemes that are affordable by the low income, uneducated, unsalaried
7
and families with childr en. Investment companies should make the provision and increase benefits,
for
their schemes, to allow people to invest in the monthly mode, which is
preferred by most investors. infrastructure,
If people invest in long term saving schemes and
the national saving rate will increase, which in turn will lead to a more
prosperous India. http://connection.ebscohost.com/c/articles/57489808/empirical-study-some-demographic-characteristicsinvestors-impact-pattern-their-savings-risk-coverage-through-insurance-schemes
Kar Pratip, Natarajan I and Singh J P in their research paper “Survey of Indian
Investors” published in SEBI-NCAER June 2000 concluded that the households
investment in shares, debentures and mutual funds was below 10% and the equity investor households portfolio was of relatively small value and undiversified. Further they found that one set of households, in spite of their lower income and lower penetration level of consumer durables, were in the securities market, while another set of household with higher
income
and
higher
penetration
level
of
consumer durables did not have
investment in securities market. Kar Pratip, Natarajan I and Singh J P (2000) “Survey of Indian Investors”
published in SEBI-NCAER .
Krishnamoorthi C in his research paper “Changing Pattern of Indian Households:
Savings in Financial Assets” published in RVS Journal of management, 2009
concluded that irrespective of the developments in the capital market/economic conditions, investors like to invest regularly and this investment behaviour is highly related to educational background. Their occupation, reading habit of investment news and the time taken for investment decision making process. Krishnamoorthi C (2009) “Changing Pattern of Indian Households: Savings in Financial Assets” published in RVS Journal of management, (vol. 2, no. 1, pg
no. 79-90)
Mittal M. and A. Dhade in their research paper “Gender Difference In Investment
Risk-Taking: An Empirical Study” published in The ICFAI Journal of Behavioural Finance, 4(2): 32-42. 2007, Observed that risk-taking involves the selection of options that might result in negative outcomes. While present is certain, future is uncertain. Hence, all investment involves risk. Decourt (2007) indicated that the process of making
8
investment decisions is based on the ‘ behavioural economies theory which uses the fundamental aspects of the ‘Prospect Theory developed by Kahneman and Tversky (1979) . Mittal M. and A. Dhade (2007) “Gender Difference In Investment Risk -Taking: An Empirical Study” published in The ICFAI Journal of Behavioral Finance, (Vol. 4 No.2 pp. 32 -42)
P. K. Das in his Research paper “A Review of Tax Planning for Educational
Expenses on Children”, published in The Journal of Accounting and Finance, April-14
September 2006 concluded that Proper Tax Planning is very much helpful in minimising the burden of Income Tax for incurring expenses on children education as well as having total exemption available. He suggested that the investor should keep a proper account of all relevant expenses incurred on the education of children, during the same financial year so that planning can be made, as required, to get Deductions And Exemptions.
P. K. Das (2006) “A Review of Tax Planning for Educational Expenses on Children”, published in The Journal of Accounting and Finance, (Vol. 20, pp
33)
Rajarajan V. in his article “Stage in Life Cycle and Investment Pattern” published in
Finance India, 1999 studied Chennai investors financial investments and showed that life-cycle stage of individual investor was an important variable in determining the size of the investments in financial assets and the percentage of financial assets in risky category. Rajarajan V. (1999) “Stage in Life Cycle and Investment Pattern” published in
Finance India, 1999 (Vol.13, No. 2, pp. 477-485)
Ranganathan K. in his article “A Study of Fund Selection Behaviour of Individual
Investors towards Mutual Funds: With Reference To Mumbai City” published in
ICFAI Journal of Behavioural Finance, 3(2): 63-88. 2006, noted that financial markets are affected by the financial behaviour of investors. She observed that consumer behaviour from the marketing world and financial economics had brought together a need to study an exciting area of ‘behavioural finance. this study was an attempt to examine the related
aspects of the fund selection behaviour of individual investors towards mutual funds in the city of Mumbai. Ranganathan K. (2006) “A Study of Fund Selection Behavior of Individual
9
Investors towards Mutual Funds: With Reference To Mumbai City” published in ICFAI Journal of Behavioral Finance, (Vol.3No.2 pp 63-88)
S. Saravana Kumar in his article “An Analysis of Investor Preference Towards Equity and
Derivatives” published in The Indian journal o f commerce, July-September 2010 concluded
that the most of the investor are aware of high risk involved in the derivative market. To reduce the risk in the market, the investors should strictly follow the stop loss method. The study reveals that most of the investor prefers cash market where the script can be held for long term and the risk is less and it is transferable to others with minimal time period. Even though risk is higher, some investors prefer derivative market where return is also higher. The investors are highly satisfied with equity shares because of many reasons, i.e., liquidity, low investment, capital appreciation etc. S. Saravana Kumar (2010) “An Analysis of Investor Preference Towards Equity and Derivatives” published in The Indian journal of commerce, (Vol. 63
,No.3, pp 71)
Saptarshi purkayastha in his article “Investor Profiling and Investment Planning: An
Empirical Study” published in The Icfaian journal of Management Research, Dec 2008 concluded that younger investors and those with high income are willing to take more risk. According to him people do not take much risk when the question of investment of their hard-earned money comes. . Saptarshi purkayastha (2008) “Investor Profiling and Investment Planning: An Empirical Study” published in The Icfaian journal of Management Research,
(Vol.7, No. 12, pp 17-40)
Sarita aggrawal and Monika Rani in their article “Attitude Towards Insurance Cover”
published in The IUP Journal of Risk & Insurance, January 2011 concluded that people prefer public sector for the insurance than the private sector insurance, the reason behind this is the trust and faith in LIC. People from every occupation, age, income level and qualification want to secure their future by taking a policy, besides good return on investment and rebate on tax. Sarita aggrawal and Monika Rani (2011) “Attitude Towards Insurance Cover”
published in The IUP Journal of Risk & Insurance, (Vol. 8, No. 1, pp.62)
Yilmazer T in his article “Do Children Affect Household Portfolio Allocation?”
10
published in job market paper, evidence from the survey of consumer finances, November 10, 2001. Concluded that the number of children had a positive and statistically significant impact on home ownership and negative and statistically significant impact on the proportion of investments in shares. Yilmazer T (2001) “Do Children Affect Household Portfolio Allocation?”
published in job market paper, evidence from the survey of consumer finances, .
11
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2.1 HISTORY OF STOCK MA RKET IN INDI A
Indian Stock Markets are one of the oldest in Asia. Its history dates back to nearly 200 years ago. The earliest records of security dealings in India are meager and obscure. The East India Company was the dominant institution in those days and business in its loan securities used to be transacted towards the close of the eighteenth century. By 1830's business on corporate stocks and shares in Bank and Cotton presses took place in Bombay. Though the trading list was broader in 1839, the re were only half a dozen brokers recognized by banks and merchants during 1840 and 1850.The 1850's witnessed a rapid development of commercial enterprise and brokerage business attracted many men into the field and by 1860 the number of brokers increased into 60. At the end of the American Civil War, the brokers who thrived out of Civil War in 1874, found a place in a street (now appropriately called as Dalal Street) where they would conveniently assemble and transact business. In 1887, they formally established in Bombay, the "Native Share and Stock Brokers’ Association" (which is alternatively known as “The
Stock Exchange "). In 1895, the Stock Exchange acquired a premise in the same street and it was inaugurated in 1899. Thus, the Stock Exchange at Bombay was consolidat ed 2.1.1 Pre- Independence Scenar io
The Second World War broke out in 1939. It gave a sharp boom which was followed by a slump. But, in 1943, the situation changed radically, when India was fully mobilized as a supply base. On account of the restrictive controls on cotton, bullion, seeds and other commodities, those dealing in them found in the stock market as the only outlet for their activities. They were anxious to join the trade and their number was swelled by numerous others. Many new associations were constituted for the purpose and Stock Exchanges in all parts of the country were floated. The Uttar Pradesh Stock Exchange Limited (1940), Nagpur Stock Exchange Limited (1940) and Hyderabad Stock Exchange Limited (1944) were incorporated. In Delhi two stock exchanges - Delhi Stock and Share Brokers' Association Limited and the Delhi Stocks and Shares Exchange Limited - were floated and amalgamated into the Delhi Stock Exchange Association Limited.
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2.1.2 Post-Independence Scenar io
Most of the exchanges suffered almost a total eclipse during depression. Lahore Exchange was closed during partition of the country and later migrated to Delhi and merged with Delhi Stock Exchange. Bangalore Stock Exchange Limited was registered in 1957 and recognized in 1963.
Most of the other exchanges languished till 1957 when they applied to the Central Government for recognition under the Securities Contracts (Regulation) Act, 1956. Only Bombay, Calcutta, Madras, Ahmadabad, Delhi, Hyderabad and Indore, the well established exchanges, were recognized under the Act.
Thus, during early sixties there were eight recognized stock exchanges in India (mentioned above). The number virtually remained unchanged, for nearly two decades. During eighties, however, many stock exchanges were established: Cochin Stock Exchange (1980), Uttar Pradesh Stock Exchange Association Limited (at Kanpur, 1982), and Pune Stock Exchange Limited (1982), Ludhiana Stock Exchange Association Limited (1983), Gauhati Stock Exchange Limited (1984), Kanara Stock Exchange Limited (at Mangalore, 1985), Magadh Stock Exchange Association (at Patna, 1986), Jaipur Stock Exchange Limited (1989), Bhubaneswar Stock Exchange Association Limited (1989), Saurashtra Kutch Stock Exchange Limited (at Rajkot, 1989), Vadodara Stock Exchange Limited (at Baroda, 1990) and recently established exchanges - Coimbatore and Meerut. Thus, at present, there are more than twenty four recognized stock exchanges in India excluding the Ove r the Counter Exchange of India Limited (OTCEI) and the National Stock Exchange of India Limited (NSEIL).
2.1.3 Trading Pattern of the India n Stock Marke t
Trading in Indian stock exchanges is limited to listed securities of public limited companies. They are broadly divided into two categories, namely, specified securities (forward list) and non-specified securities (cash list). Equity shares of dividend paying, growth-oriented companies with a paid-up capital of at least Rs.50 million and a market capitalization of at least Rs.100 million and having more than 20,000 shareholders are, normally, put in the specified group and the balance in non-specified group.
14
Two types of transactions can be carried out on the Indian stock exchanges:
(A) Spot Delivery Transactions "for delivery and payment within the time or on the date stipulated when entering into the contract which shall not be more than 14 days following the date of the contract".
(B) Forward Transactions "delivery and payment can be extended by further period of 14 days each so that the overall period does not exceed 90 days from the date of the contract". The latter is permitted only in the case of specified shares. The brokers who carry over the outstanding pay carry over charges (cantango or backwardation) which are usually determined by the rates of interest prevailing.
2.2 STOCK MARKETS IN INDIA Stock exchanges are the perfect type of market for securities whether of government and semi-govt bodies or other publ ic bodies as also for shares and debe ntures issued by the joint stock companies. In the stock market, purchases and sales of shares are affected in conditions of free competition. Government securities are traded outside the trading ring in the form of over the counter sales or purchase. The bargains that are struck in the trading ring by the members of the stock exchanges are at the fairest prices determined by the basic laws of supply and demand.
2.2.1 Definition of a stock exc hange:
“Stock exchange means anybody or indiv iduals whether incorporated or not, constituted for
the purpose of assisting, regulating or controlling the business of buying, selling or dealing in securities.” The securities include: Shares of public company. Government securities. Bonds
2.2.2 History of Stoc k Exch anges:
The only stock exchanges operating in the 19th century were those of Mumbai setup in 1875 and Ahmadabad set up in 1894. These w ere organized as voluntary nonpr ofits- marking associations of brokers to regulate and protect their interests. Before the control on securities under the constitution in 1950, it was a state subject and the Bombay securities contracts 15
(control) act of 1925 used to regulate trading in securities. Under this act, the Mumbai stock exchange was recognized in 1927 and Ahmadabad in 1937. During the war boom, a number of stock exchanges were organized. Soon after it became a central subject, central legislation was proposed and a committee headed by A.D.Gorwala went into the bill for securities regulation. On the basis of the committees recommendations and public discussion, the Securities contract (regulation) act became law in 1956.
2.2.3 Functions of Stock E xchanges:
Stock exchanges provide liquidity to the listed companies. By giving quotations to the listed companies, they help trading and raise funds from the market. Over the hundred and twenty years during which the stock exchanges have existed in this country and through their medium, the central and state government have raised crores of rupees by floating public loans. Municipal corporations, trust and local bodies have obtained from the public their financial requirements, and industry, trade and commerce- the backbone of the countrys economy-have secured capital of crores or rupees through the issue of stocks, shares and debentures for financing their day-to-day activities, organizing new ventures and completing projects of expansion, diversification and modernization. By obtaining the listing and trading Facilities, public investment are increased and companies were able to raise more funds. The quoted companies with wide public interest have enjoyed some benefits and assets valuation has become easier for tax and other purposes.
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2.3 REGULATORY AUTHORITY 2.3.1SEBI( ecurities and Exchange Board of In dia)
In 1998, the SEBI was est ablished by the Government ugh an of executive India thr resolution, and was subseque tly upgraded as a fully statutory autonomous board) body in (a the year 1992 with the passi g of the SEBI act once30th of Government Jan 1992. In pl control statutory and autono
ous regulatory boardssibilities, with defined to cover respo
both development and regula tion of the market, and independent have beenpowers set up. Paradoxically this is a positiv outcome of the securities scam of 1990-91.
The basic objectives of oard the b were identified as:
To promote the interes ts of investors in securities. To promote the devel pment of securities market. To regulate the securit ies market and For matters connected there with or incidental there zto.
Since its inception SEBI been has working targeting the securities and fulfillment of its objectives
is attending to the
ith commendable zeal and provements dexterity. The in the i
securities markets like capit lizations requirements, margining, establis hments of clearing corporation etc. reduced the ri sk of credit and also reduced the market.
SEBI has introduced the com rehensive regulatory measures prescribed n criteria, the code of obligati ns and the ntermediaries code of conduct like, for different i
17
rms, the eligibility
bankers to issue, merchant bankers, brokers and sub-brokers, registrars, portfolio managers, credit rating agencies, underwriters and others. It has framed by-laws, risk identification and risk management systems for clearing houses of stock exchanges, surveillance system etc. which has made dealing in securities both safe And transparent to the end investors. Another significant event is the approval of trading in stock indices (like S&P CNX Nifty and Sensex) in 2000. A market index is a convenient and effective product because of the following reasons: It acts as a barometer for market behavior. It is used to benchmark portfolio performance. It is used in derivative instrument like index futures and index options. It can be used for passive fund management as in case if index funds.
Two board approaches of SEBI is to integrate the securities market at the national level, and also to diversify the trading products, so that there is an increase in number of traders including banks, financial institutions, insurance companies, mutual funds, primary dealers etc. to transact through the exchanges. In this context the introduction of derivatives trading through Indian stock exchanges permitted by SEBI in 2000 AD is a real landmark.
SEBI appointed the L.C. Gupta Committee in 1998 to recommend the regulatory frameworks for derivatives trading and suggest by-laws for regulation and control of trading and settlement of derivatives contracts. The board of SEBI in its meeting held on May 11, 1198 accepted the recommendations of the committee and approved the phased introduction of derivatives trading in India beginning with stock index futures. The board also approved the “Suggestive by-laws” as recommended by the Dr. L.C. Gupta Committee for regulation and
control of trading and settlement of derivatives contracts.
SEBI then appointed the J. R. Verma Committee to recommend Risk Containment Measures (RCM) in the Indian stock index futures market. The report was submitted in November 1998.
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However the Securities Contracts (Regulation) act, 1956 (SCRA) required amendment to include “derivatives” in the definitions of securities to enable SEBI to introdu ce trading in
derivatives. The necessary amendment was then carried out by the Government in 1999. The Securities law (Amendment) bill, 1999 was introduced. In December 1999 the new framework was approved.
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2.4. ONLINE TRADING INDUSTRY – INDIA
With an online trading account, you can buy and sell shares in an instant! Anytime you like and from anywhere you like. You can choose the online trading account that suits your trading habits and preference. In online trading the orders are sent to the exchanges, the confirmation is immediately conveyed through E-mail and the proceeds or shares are credited (or debited) to the bank and demat accounts. Globally, trade every seconds trade that goes through in the stock market is an online trade. We in India have a long way to go but we sure are catching up a good speed. Companies offer a fast online share dealing service using real time quotes, free up to the minute advice, information and tips. Trades may be both in NSE & BSE. Some online companies offer investment in mutual funds and IPOs online. 2.3.1 The Indian problem:
Some other structural aspects need to be kept in mind while analyzing the e-broking scenario in India. The breadth of participation in the stock market in India is significantly lower as compared to western markets with only 12.1 million equity owning households and three million depository accounts. Brokerage rates in India are significantly lower than US rates, with Indian brokers charging com missions of 0.5% to 1.25% per trade. Fo r any player, the pricing strategy for e-broking for the retail segment is as follows: For the cash segment, the brokerage charged varies from 0.4% to 0.85% based on the volume of trade done per quarter while for the margin segment; the brokerage cha rged varies from 0. 05% to 0.15% based on the volume of trade done per quarter. The above charges are inclusive of depository charges and all the other statutory charges.
2.5 VARIOUS STOCK EXCHANGES IN INDI A Bombay Stock Exchange of India (BSE) National Stock Exchange of India (NSE) •
Indian Commodity Exchange (ICEX)
•
United Stock Exchange of India (USE)
•
Multi Commodity Exchange (MCX)
•
Over the Counter Exchange of Indi a (OTCEI)
•
Inter-connected Stock Exchange of India (ISE) 20
•
Madras Stock Exchange (MSE)
•
Coimbatore Stock Exchange (CSX)
•
Ahmadabad Stock Exchange (ASE)
•
Bhubaneswar Stock Exchange (BhSE)
•
Cochin Stock Exchange (CSE)
•
Hyderabad Stock Exchange (HSE)
•
•
Calcutta Stock Exchange (CSE) Delhi Stock Exchange (DSE)
•
Bangalore Stock Exchange (BgSE)
•
Madhya Pradesh Stock Exchange, Indore
•
Jaipur Stock Exchange (JSE)
•
Magadh Stock Exchange, Patna
•
UP Stock Exchange (UPSE)
•
Vadodara Stock Exchange,Vadodara (VSE)
•
Guwahati Stock Exchange Ltd
•
Ludhiana Stock Exchange Association Ltd
•
•
Kanara Stock Exchange Ltd Mangalore Stock Exchange Ltd
•
Pune Stock Exchange Ltd
•
Saurashtra Kutch Stock Exchange Ltd
•
Meerut Stock Exchange Ltd
•
Intrex Trade Exchange Ltd
•
United Stock Exchange of India
•
Mahurat trading
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Various Stock Exchanges 2.5.1 NSE (NATI ONAL STOCK EXCHANGE)
The National Stock Exchange of India Limited has genesis in the report of the High Powered Study Group on Establishment of New Stock Exchanges, which recommended promotion of a National Stock Exchange by financial institutions (FIs) to provide access to i nvestors from
all across the country on an equal footing. Based on the recommendations, NSE was promoted by leading Financial Institutions at the behest of the Government of India and was incorporated in November 1992 as a tax-paying company unlike other stock exchanges in the country. On its recognition as a stock exchange under the Securities Contracts (Regulation) Act, 1956 in April 1993, NSE com menced operations in the Wholesale Debt Market (WDM) segment in June 1994.
The Capital Market (Equities) segment commenced operations in November 1994 and operations in Derivatives segment commenced in June 2000 NSE's mission is setting the
22
agenda for change in the securities markets in India. The NSE was set-up with the main objectives of:
Establishing a nation-wide trading facility for equities and debt instruments. Ensuring equal access to investors all over the country through an appropriate communication network. Providing a fair, efficient and transparent securities market to investors using electronic trading systems. Enabling shorter settlement cycles and book entry settlements systems, and Meeting the current international standards of securities markets.
The standards set by NSE in terms of market practices and technology, have become industry benchmarks and are being emulated by other market participants. NSE is more than a mere market facilitator. It's that force which is guiding the industry towards new horizons and greater opportunities.
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2.5.2 BSE (BOMBAY STOCK EXCHANGE)
Bombay stock exchanges limited is the oldest stock exchange in Asia with a rich heritage. Popularly known as “The native share and shareholders association” in 1875. It is the first
stock exchange in the country to obtain permane nt recognition in 1956 from the government of India under securities contracts (regulation) act, 1956. The exchanges pivotal and preeminent role in the development of the Indian capital market is widely recognized and its index, SENSEX, is tracked worldwide. Earlier an Association of persons (AOP), the exchanges is now a de-mutualized and corporative entity incorporated under the provisions of the companies act, 1956, pursuant to the BSE (Corporation and Demutualization) scheme, 2005.
Notified by the Securities and Exchange Board of India
With demutualization, the trading rights and ownership rights have been de-linked effectively addressing concerns regarding perceived and real conflicts of interest. The exchange is professionally managed under the overall direction of the board of directors. The board comprises eminent professionals, representatives of trading members and the Managing directors of the exchange. The board is inclusive and is designed to before from the participation of market intermediaries. In terms of organization structure, the board formulates larger policy issues and exercises overall control. The committees constituted by the board are broad based. The day to day operations of the exchange are managed by the managing director and a management team of professionals.
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The exchange has a nationwide reach with a presence in 417 cities and towns of India. The systems and processes of the exchange are designed to safeguard market integrity and enhance transparency in operations. During the year 2004-05, the trading volumes on the exchange showed robust growth. The exchange provides an efficient and transparent market for trading in equity, debt instruments and derivatives. The BSEs Online Trading System (BOLT) is a pr oprietary
system of the clearing and settlement functions of the exchange are ISO 9001:2000 certified.
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2.5.3 MULTI COMMODITY EXCHANGE
The Multi Commodity Exchange of India Limited (MCX), Indias first listed exchange, is a
state-of-the-art, commodity futures exchange that facilitates online trading, and clearing and settlement of commodity futures transactions, thereby providing a platform for risk management. The Exchange, whic h started operations in November 2003, operate s within the regulatory framework of the Forward Contracts (Regulation) Act, 1952. MCX offers trading in varied commodity futures contracts across segments including bullion, ferrous and non-ferrous metals, energy, agri-based and agricultural commodities. The Exchange focuses on providing commodity value chain participants with neutral, secure and transparent trade mechanisms, and formulating quality parameters and trade regulations, in conformity with the regulat ory framework. The Exchange has an extensive national reach, with over 2100 members, operations through more than 400,000 trading terminals (including CTCL), spanning over 1900 cities and towns across India. MCX is Indias leading
commodity futures exchang e with a market share of about 86 per cent in terms of the value of commodity futures contracts traded in 9M FY2013-14. To ease participation, the Exchange offers facilities such as calendar-spread facility, as also EFP (Exchange of Futures for Physical) transactions which enables participants to swap their positions in the futures/ physical markets.
The Exchanges flagship
index, the
MCXCOMDEX, is a real-time composite commodity futures price index which gives information on market movements in key commodities. Other commodity indices developed by the exchange include MCXAgri, MCXEnergy, and MCXMetal. MCX has been certified to three ISO standards including ISO 9001:2008 quality management standard, ISO 27001:2005 information security management standard and ISO 14001:2004 environment management standard.
26
With an aim to seamlessly integrate with the global commodities ecosystem, MCX has forged strategic alliances with leading international exchanges such as CME Group, London Metal Exchange (LME), The Balti c Exchange, Dalian Commodity Exchange (DCE) and Taiwan Futures Exchange (TAIFEX). The Exchange has also tied-up with various trade bodies, corporates, educational institutions and R&D centres across the country. These alliances enable the Exchange in improving trade practices, increasing awareness, and facilitating overall improvement of commodity futures market. MCXs ability to use and apply technology efficiently is a key factor in the development of its business. The exchanges technology framework is designed to provide high availability
for all critical components, which guarantees continuous availability of trading facilities. The robust technology infrastructure of the exchange, along with its with rapid customisation and deployment capabilities enables it to operate ef ficiently with fast order routing, immediate trade execution, trade reporting, real-time risk management, market surveillance and market data dissemination. The Exchange is committed to nurturing communities that are vital for the development of its business. To achi eve our goal of inclusive growth, we collaborate wit h diversified partne rs. Gramin Suvidha Kendra, our social inclusion programme in partnership with India Post, seeks to enhance farmers value realisation from agricultural activities. MCX has been continuously raising the bar through effective research and product development, intelligent use of information and technology, innovation, thought leadership and ethical business conduct. National Commodity & Derivatives Exchange Limited (NCDEX) is a professionally
managed on-line multi commodity exchange. The shareholders of NCDEX comprises of large national level institutions, large public sector bank and companies. Promoter shareholders: ICICI Bank Limited (ICICI)*, Life Insurance Corporation of India
(LIC), National Bank for Agriculture and Rural Development (NABARD) and National Stock Exchange of India Limited (NSE). Other shareholders: Canara Bank, Punjab National Bank (PNB), CRISIL Limited, Indian Farmers Fertiliser Cooperative Limited (IFFCO), Goldman Sachs, Intercontinental Exchange (ICE), Shree Renuka Sugars Limited, Jaypee Capital Services Limited and Build India Capital Advisors LLP, Oman India Joint Invesmtnet Fund, IDFC Private Equity Fund III.
27
2.5.4 NATIONAL COMMODITY &DERIVATIVES EXCHANGE LTD
NCDEX is the only commodity exchange in the country promoted by national level institutions. This unique parentage enables it to offer a bouquet of benefits, which are currently in short supply in the commodity markets. The institutional promoters and shareholders of NCDEX are prominent players in their respective fields and bring with them institutional building experience, trust, nationwide reach, technology and risk management skills. NCDEX is a public limited company incorporated on April 23, 2003 under the Companies Act, 1956. It obtained its Certificate for Commencement of Business on May 9, 2003. It commenced
its
operations
on
December
15,
2003.
Corporate
Identity
No.
is
U51909MH2003PLC140116. NCDEX is a nation-level, technology driven de-mutualised on-line commodity exchange with an independent Board of Directors and professional management - both not having any vested interest in commodity markets. It is committed to provide a world-class commodity exchange platform for market participants to trade in a wide spectrum of commodity derivatives driven by best global practices, professionalism and transparency. NCDEX is regulated by Forward Markets Commission. NCDEX is subjected to various laws of the land like the Forward Contracts (Regulation) Act, Companies Act, Stamp Act, Contract Act and various other legislations. NCDEX headquarters are located in Mumbai and offers facilities to its members from the centres located throughout India.
28
As on March 30, 2013, the Exchange offered 31 contracts for trading of which: 23 agricultural commodities, 3 precious metals, 2 energy, 1 polymer and 2 other metals. The top 5 commodities, in terms of volume traded at the Exchange, were Soya oil, Soyabean, RM seed, Chana and Castor Seed. 2.6 MARKET PARTICIPANTS
Market participants include individual reta il investors, institutio nal investors such as mutual funds, banks, insurance companies and hedge funds, and also publicly traded corporations trading in their own shares. Some studies have suggested that institutional investors and corporations trading in their own shares generally receive higher risk-adjusted returns than retail investors. A few decades ago, worldwide, buyers and sellers were individual investors, such as wealthy businessmen, usually with long family histories to particular corporations. Over time, markets have become more "institutionalized"; buyers and sellers are largely institutions (e.g., pension funds, insurance companies, mutual funds, index funds, exchange-traded funds, hedge funds, investor groups, banks and various other fina ncial institutio ns).
The rise of the institutional investor has brought with it some improvements in market operations. There has been a gradual tendency for "fixed" (and exorbitant) fees being reduced for all investors, partly from falling administration costs but also assisted by large institutions challenging brokers' oligopolistic approach to setting standardized fees.
2.7 RELATION OF THE STOCK MARKET TO THE MODERN FINANCIAL SYSTEM
The financial system in most western countries has undergone a remarkabl e transformation. One feature of this development is disintermediation. A portion of the funds involved in saving and financing, flows directly to the financial markets instead of being routed via the traditional bank lending and deposit operations. The general public interest in investing in the Stock market, either directly or throu gh mutual funds, has been an importan t component of this process. Statistics show that in recent decades shares have made up an increasingly large proportion of households' financial assets in many countries. In the 1970s, in Sweden, deposit accounts and other very liquid assets with little risk made up almost 60 percent of households'
29
financial wealth, compared to less than 20 percent in the 2000s. The major part of this adjustment is that financial portfolios have gone directly to shares but a good deal now takes the form of various kinds of institutional investment for groups of individuals, e.g., pension funds, mutual funds, hedge funds, insurance investment of premiums, etc. The trend towards forms of saving with a higher risk has been accentuated by new rules for most funds and insurance, permitting a higher proportion of shares to bonds. Similar tendencies are to be found in other industrialized countries. In all developed economic systems, such as the European Union, the United States, Japan and other developed nations, the trend has been the same: saving has moved away from traditional (government insured) bank deposits to mo re risky securities of one sort or another.
2.8 CLEARING AND SE TTLEMENT AGE NT
NSDL, the first and largest depository in India, NSDL works to support the investors and brokers in the capital market of the country. NSDL aims at ensuring the safety and soundness of Indian marketplaces by developing settle ment solutions that increa se efficiency, minim ise risk and reduce costs. At NSDL, we play a quiet but central role in developing products and services that will continue to nurture the growing needs of the financial services industry.
A Depository facilitates holding of securities in the electronic form and enables securities transactions to be processed by book entry by a Depository Participant (DP), who as an agent of the depository, offers depository services to investors. According to SEBI guidelines, financial institutions, banks, custodians, stockbrokers, etc. are eligible to act as DPs. The investor who is known as beneficial owner (BO) has to open a demat account through any DP for dematerialisation of his holdings and transferring securities.
30
CDSL was promoted by BSE Ltd jointly with leading banks such as State Bank of India, Bank of India, Bank of Baroda, HDFC Bank, Standard Chartered Bank, Union Bank of India.
2.9 SWOT Analysis of Indian Stock M arket Strength
The first and foremost strength of Indian stock market is its ability to provide high return.
SEBI a regulatory body of Indian stock market who protects the interest of the investors.
Large number of securities which provides medium for investment.
Large number of Brokers who plays a role of facilitator for investment.
Weakness
The weak point of Indian stock market is its volatility i.e. High risk.
It is a kind of gambling where no guarantee of return and some time it depends on luck also.
Opportunity
Stock market provides an opportunity to money lender and money seeker to Invest and use money for their plan.
It provides an opportunity to the investor to be the owner of the company and contribute
in the business decision of the company. Stock market is a kind of indicator of the economic growth of the country where it provides an opportunity to gain according to the inflation of the country or more than that.
Threats
There are many competitors of stock market such as post office savings, public provident fund, company fixed deposits, fixed deposits with bank etc. which provides fixed and assured returns.
31
32
33
COMPANY PROFILE
3.1 INTRODUCTION
Sharekhan is one of the leading retail broking House of SSKI Group which was running successfully since 1922 in the country. It is the retail broking arm of the Mumbai-based SSKI Group, which has over eight decades of experience in the stock broking business. Sharekhan offers its custom ers a wide range of equity related services including trade executio n on BSE, NSE, Derivatives, depository services, online trading, investment advisory, Mutual Fund Advisory etc. The firms online trading and investment site - www.sharekhan.com - was launched on Feb 8,
2000. The site gives access to superio r content and transacti on facility to retail cus tomers across the country. Known for its jargon-free, investor friendly language and high quality research, the site has a regist ered base of over tw o lakh customers. The number of trading members currently stands More than 8 Lacs. While online trading currently accounts for just over 8 per cent of t he daily trading in stocks in India, Sharekhan alone accounts for 32 per cent of the volumes traded online. The content-rich and research oriented portal has stood out among its contemporaries because of its steadfast dedication to offering customers best-of-breed technology and superior market information. The objective has been to let customers make informed decisions and to simplify the process of investing in stocks . On April 17, 2002 Sharekhan launched Speed Trade, a net-based execu table application that emulates the broker terminals along with host of other information relevant to the Day
Traders. This was for the first time that a net-based trading station of this caliber was offere d to the traders. In the last six months Speed Trade has become a de facto standard for the Day Trading community over the net. On October 01, 2007 Sharekhan again launched his another integrated Software based product Trade Tiger, a net-based executable applic ation that emulat es the broker terminal s
34
along with host of other information relevant to the Day Traders. It has another quality which differ it from other that it has the combined te rminal for EQUITY and COMMODITIES both. Share khans ground network includes over 2200centers in 600 cities in India, of which 500
are fully-owned branches. Sharekhan has always believed in investing in technology to build its business. The company has used some of the best-known names in the IT industry, like Sun Microsystems, Oracle, Microsoft, Cambridge Technologies, Nexgenix, Vignette, Verisign Financial Technologies India Ltd, Spider S oftware Pvt Ltd. to build its trading engine and content. Previously the Morakiya family holds a majority stake in the company but now a world famous brand CITI GROUP has taken a majority stake in the company. HSBC, Intel & Carlyle are the other investors. With a legacy of more than 80 years in the stock markets, the SSKI group ventured into institutional broking and corporate finance 18 years ago. Presently SSKI is one of the leading players in institutional broking and corporate finance activities. SSKI holds a sizeable portion of the market in each of these segments. SSKIs institutional broking arm accounts for 7% of
the market for Foreign Institutional portfolio investment and 5% of all Domestic Institutional portfolio investment in the country . It has 60 institutional clients spread over India , Far East, UK and US. Foreign Institutional Investors generate about 65% of the organizations
revenue, with a daily turnover of over US$ 4 million. The Corporate Finance section has a list of very prestigious clients and has many ‘firsts to its
credit, in terms of the size of deal, sector tapped etc. The group has placed over US$ 1 billion in private equity deals. Some of the clients include BPL Cellular
Holding,
Gujarat
Pipavav,
Essar,
Hutchison, Planetasia, and Shoppers Stop.
35
3.2 PROFILE OF THE COMPANY
Name of the company: Share khan ltd
Year of Establishment: 1925
Headquarter: Share Khan SSKIA-206 Phoenix House Phoenix Mills Compound
Lower Parel Mumbai –Maharashtra INDIA-400013
Nature of Business: Service Provider
Services: Depository Services, Online Services and Technical Research
Number of Employees: Over 4000
36
37
3.3. BOARD OF DIRECTORS
Sharekhan Limited INSIDERS ON Board Members Name (Connections)
Relationships
Title
Tarun Shah
9 Relationships
Chief Executive Officer and Whole-Time Director
Jaideep Arora
9 Relationships
Whole-Time Director
Shankar Vailaya
9 Relationships
Whole-Time Director
3.4. BRAND NAME
The company as a whole in its offline business has named itself as SSKI Securities Private
. The Limited – Shripal Sevantilal Kantilal Ishwarlal Securities Private Limited company has preferred to name themselves under a blanket family name. But in its online division started since 1997, the company preferred to name itself as “SHAREKHAN”. The Brand name “SHAREKHAN” itself suggests the business in which
the company is dealing so that the customer could easily identify the product or service category. 3.5. MISSION:
To educate and empower the individual investor to make better investment decisions through quality advice and superior service. 3.6. VISION:
To be the best retail brokering Brand in the retail business of stock market.
38
3.7. ACHIEVEMENTS OF SHAREKHAN:
A wired company along with Reliance, Hll, Infosys, e tc by ‘Business Today, January 2004 edition. It was awarded ‘Top Domestic Brokerage House four times by Euro and Asia money. It was Winner of “Best Financial Website” aw ard. Indias most preferred brokers within 5 years. “CNBC Awaaz customers Award 2005”.
3.8. SHAREKHAN LTD. PROVIDE DIFFERENT PRODUCT AS FOLLOWS
1. Equity and Derivative Trading on BSE and NSE. 2. Depository Services. 3. Online Trading. 4. IPO Services. 5. Commodities Trading on MCX and NSDEX. 6. Portfolio Management Services.
39
3.9. SERVICES PROVIDED BY SHAREKHAN
Online Services Offline Services Depository Services Equity and Derivatives Trading Fundamental Research Technical Research Portfolio Management Commodities Trading Dial-n-trade Share shops
40
1. Online Services:
Mutual Funds
Commodity Futures
PMS
Technical PMS
Demat Services
Share shops
2. Offline Services:
Trading with the help of Dealer
Trading without credit
By calling to the Share shops
Credit facility (Only in Delivery-based)
T+2 facility
Special website for Offline Clients: www.mysharekhan.com
Physical contract notes
3.10. TYPES OF ACCOUNT Classic A/c Trade tiger
Classic A/c: Features of Classic A/c: •
Online trading account for investing in Equities and Derivatives via
sharekhan.com. •
Integration of: Online trading + Bank + Demat account.
•
Instant cash transfer facility against purchase & sale of shares.
•
•
Make IPO bookings. You get Instant order and trade confirmations by e-mail
•
Streaming Quotes.
•
Personalized Market Scan with your own customized stock ticker.
•
Single screen interface for cash and derivatives
41
Trade tiger
Features of Trad e tiger:
A single platform for multiple exch ange BSE & NSE (Cash & F&O), MCX, NCDEX, Mutual Funds, IPOs
Multiple Market Watch available on a Single Screen
Multiple Charts with Tick by Tick Intraday and End of Day Charting powered with various Studies
Graph Studies include Average, Band-Bollinger, Know SureThing, MACD etc
Apply studies such as Vertical, Horizontal, Trend, Retracement & Free lines
User can save his own defined screen as well as graph template that is, saving the layout for future use.
User-defined alert settings on an input Stock Price trigger
Tools available to guage market such as Tick Query, Ticker, Market Summary, Action Watch, Option
Premium Calculator, Span Calculator
Shortcut key for FAST access to order placements & reports
Online fund transfer activated with 12 Banks
Dial-n-trade:
Features of Dial-n-trade:
Two dedicated numbers for placing your orders with your cell phone or
landline. Toll free number: 1-800-22-7050 . For people with difficulty in
42
accessing the toll-free number, we also have a Reliance number 30307600 which is charged at Rs. 1.50 per minute for STD calls.
Automatic funds transfer with phone banking (for Citibank and HDFC bank customers).
Simple
and
Secure
Interactive
Voice
Response
based
system
for
authentication.
No waiting time. En ter your TPIN to be transferred to our telebrokers.
You also get the trusted, professional advice of our teleprocess.
After hours order placement facility between 8.00 am and 9.30 am (timings to be extended soon.
Share mobile
Sharekhan launches Share Mobil e, an exclusive live streaming quotes and trading facility for its online trading customers
Next time when you are on move, you need not worry about your favorite stocks price movement. You can carry stock market terminal with you anywhere – anytime.
Special offer- 3 month free trial usage for all Sharekhan trading customers. Contact Silicon for details. Prerequisites for Share Mobile are
Java enabled Mobile Handset.
GRPS connection - For getting a GPRS connection, get in touch with your Service provider.
Now share mobile is also available on android phone and also on IOS ,windows phone Share Mobile will not work if
Your Mobile Handset does not support JAVA Applications.
If user has WAP connection of BPL (Also known as BPL WAP connection or MMS Pack)
For all Reliance Mobile User
43
3.11. SWOT ANALYSIS OF SHAREK HAN Strengths
1. Big client base 2. In-house research house 3. online as well as offline trading 4. Online IPO/ MF services 5. Share shops 6. Transparent 7. User friendly tie ups with 10 banks 8. Excellent order execution speed and reliability
Weakness
1. Lack of awareness among customer 2. Less focus on customer retention 3. Less Exposure Opportunities
1. Diversification 2. Product modification 3. Improve Web based trading 4. Provide competitive brokerage 5. Concentrate on PMS 6. Focus on Institutional investors 7. Concentrate on HNIs (high net worth investor)
3.12. COMPETITORS OF SHAREKHA N LTD: There are currently close to online brokerages in India with ICICI direct, HDFE securities, Kotak Street, Share Khan, India Bulls and 5paisa,Motilal oswal being some major competitors of Sharekhan . However, due to limited volumes, no online brokerage is currently making money and a shakeout is imminent in the near future. The going to be expected to get tougher with the advent capital account; convertibility, players such as TD Water house have already entered the Indian market, while others such as Schwab are
44
expected shortly. On an average, Rs. 40 crores per day (Rs. 1300 crores per month) is likely to be the threshold breakeven for online brokerages.
Competitors ShareKhan is one of Indias premier trading institutions.
Its main competitors are:
INDIA INFOLINE
ICICI DIRECT INDIA BULLS
RELIANCE MONEY
KOTAK SECURITIES
MOTILAL OSWAL
ANAND RATHI
RELIGARE ENTERPRISES
HDFC SECURITIES
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3.13. PORTFOLIO MANAG EMENT SERVICES Sharekhan is also having Portfolio Management Services for Exclusive clients. 1. PROPRIME -
Research & F undamental A nalysis.
Ideal for investors looking at steady and superior returns with low to medium risk appetite. This portfolio consists of a blend of quality blue-chip and growth stocks ensuring a balanced portfolio with relatively medium risk profile. The portfolio will mostly have large capitalization stocks based on sectors & themes that have medium to long term growth potential. 2. PROTECH
- Technical Analysis .
Protech uses the knowledge of technical analysis and the power of derivatives market to identify trading opportunities in the market. The Protech lines of products are designed around various risk/reward/ volatility profiles for different kinds of investment needs. THRIFTY NIFTY:
Nifty futures are bought and sold on the basis of an automated
trading system that generates calls to go long/short. The exposure never exceeds value of portfolio i.e. there is no leveraging; but being short in Nifty allows you to earn even in falling markets and there by generates linear BETA PORTFOLIO:
Positional trading opportunities are identified in the futures
segment based on technical analysis. Inflection points in the momentum cycles are identified to go long/short on stock/index futures with 1-2 month time horizon. The idea is to generate the best possible retur ns in the medium term irr espective of the direction of the market without really leveraging beyond the portfolio value. Risk protection is done based on stop losses on daily closing prices. STAR NIFTY: Trailing Stops Momentum trading techniques are used to spot short te rm
momentum of 5-10 days in stocks and stocks/index futures. Trailing stop loss method of risk management or profit protection is used to lower the portfolio volatility and maximize returns. Trading opportunities are explored both on the long and the short side as the market demands to get the best of both upwards & downward trends
46
3.14. CHARGE STRUCTURE 1) - PRE PAID OR AMC A/C:
Advance Amount which will be fully adjsted against your brokerage you paid in One year.
Following S chemes A re A vailable: -
Brokerage w ill b e c hagred -
1) 2) -
750/- Scheme:1000/-S cheme
0.05/ 0.50% 0.045/0.45%
3)
–
2,000/- Scheme: -
0.035 / 0.40%
4)
–
6,000/- Scheme: -
0.025 / 0.25%
5)
–
18,000/- Scheme: -
0.020 / 0.20%
6)
–
30,000/- Scheme: -
0.015 / 0.18%
7)
–
60,000/- Scheme: -
0.010 / 0.15%
8)
–
1,00,000/- Scheme: -
0.0075/ 0.10%
Minimum Margin of Rs. 25000/- is required for Account Opening.
Annual Maintenance Charges will NIL for 1 st year and Rs. 400/- from 2 nd year. - EXPOSURE: 4 TIMES (ON MARGINE MONEY) - EXPOSURE: 10 TIMES (ON MAX TRADING) - ONLINE IPO'S AND MUTUAL FUNDS ADVISORY IS AVAILABLE. We are having tie-up with Eleven banks for online fund transferring i.e. HDFC, ICICI, IDBI, CITI, Union Bank of India, Centurion Bank of Punjab,
Oriental Bank of Commerce, INDUSIND, AXIS,
Bank of India and Yes Bank.
Company Provide 4-6 E-mail to their customers per day. Online Trade in Share
Sharekhan customers can online trade through their computers, through internet during the market timings. Online Fund Transfer
We have tie up with Eleven Banks for online fund transferring i.e. HDFC, IDBI, CITI, UBI, OBC, INDSLANDAND and UTI BANK, Yes bank, Bank of India for Online Money Transfer. •
Research based investment advice
47
•
Investment and trading services
•
Trading and seminars
•
Technology based investment tools
•
Integrated demat facility
•
CUSTOMER CAN TRADE IN o
Equities
o
Derivatives
o
Commodities
3.15. REQUIREMENTS FOR NET TRAD ING For investors:
1. Installation of a computer with required specification 2. Installation of a mode 3. Telephone connection 4. Registration for on-line trading with broker 5. A bank account 6. Depository account 7. Compliance with SEBI guidelines for net trading
The following should be produce to get a demat account and online trading account:
As identity, proof &address proof pro duce the following things: •
Voter ID card
•
Driving license
•
PAN card
•
Ration card
•
Bank pass book
•
Telephone bill
Other requirements, which are necessary •
First page of the bank pass book and last 6 months statement.
•
Bank managers signature along with banks seal, man ager registration code on
photograph.
48
For stock brokers:
1. Permission from stock exchange for net tradin g 2. Net worth of Rs. 50 lac 3. Adequate back-up system 4. Secured and reliable software system 5. Adequate, experienced and trained staff 6. Communication of order (trade confirmation to investor by e-mail) 7. Use of authentication technologies 8. Issue of contract notes within 24 hours of the trade execution 9. Setting up a website.
The net is used as a mediu m of trading in inte rnet trading. Orders are communicated to the stock exchange through website. Internet trading started in India on 1st April 2000 with 79 members seeking permission for online trading. The SEBI committees on internet based securities trading services has allowed the net to be used as an Order Routing System (ORS) through registered stock brokers on behalf of their clients for execution of transaction. Under the Order Routing System the client enters his requirements (security, quantity, price, and buy/sell) in broker's site. They are checked electronically against the clients account and routed electronically to the appropriate exchange for execution by the broker. The client receives a confirmation on execution of the order. The customer's portfolio and ledger accounts get updated to reflect the transaction. The user should have the user id and password to enter into the electronic ring. He should also have demat account and bank account. The system permits only a registered client to log in using user id and password. Order can be placed using place order window of the website.
3.16. PROCEDURE FOR NET TRA DING Step 1: Those investors, who are interested in doing the trading over internet system i.e.
NEAT-IXS, should approach the brokers and get them self registered with the Stock Broker. Step 2: After registration, the broker will provide to them a Login name, Password and
personal identification number (PIN). Step 3: Actual placement of an order. An order can then be placed by using the place order
window as under:
49
(a) First by entering the symbol and series of stock and other parameters like quantity and price of the scrip on the place order window. (b) Second, fill in the symbol, series and the default quantity. Step 4: It is the process of review. Thus, the investor has to review the order placed by
clicking the review option. He may also re-set to clear the values. Step 5: After the review has been satisfactory, the order has to be sent by clicking on the send option. Step 6: the investor will receive an "Order Confirmation" message along with the order
number and the value of the order. Step 7: In case the order is rejected by the Broker or the Stock Exchange for certain reasons
such as invalid price limit, an appropriate message will appear at the bottom of the screen. At present, a time lag of about 10 seconds is there in executing the trade. Step 8: It is regarding charging payment, for which there are different mode. Some brokers
will take some advanc e payment room the investor and wil l fix their trading limit s. When the trade is executed, the broker will ask the investor for transfer of funds by the investor to his account. Internet trading provides total transparency between a broker and an investor in the secondary market. In the open outcry system, only the broker knew the actually transac ted price. Screen based trading provides more transparency. With online trading investors can see themselves the price at which the deal take place. The time gap has narrowed in every stage of operation. Confirmation and execution of trade reaches the investor within the least possible time, mostly within 30 seconds. Instant feedback is available about the execution. Some of the websites also offer; • •
New and research report BSE and NSE movements
•
Stock analysis
•
Freebies
•
IPO and mutual fund centres and
•
Movements of interaction stock exchanges.
50
Step by step procedure in online trading:-
Following steps explain the step by step approach to on-line trading: •
Log on to the stock broker's website
•
Register as client/investor
•
Fill the application form and client broker agreement form on the requisite value stamp paper
•
Obtain user ID and pass word
•
Log on to the broker's site using secure user ID and password
•
Market watch page will show real time on-line market data
•
Trade shares directly yourself by entering the symbol or number of the security
•
Brokers server will check your limit in the on-line accountant demat account for the number of shares and execute the trade
•
Order is executed instantly (10-30 seconds) and confirmation can be obtained.
•
Confirmation is e-mailed to investor by broker
•
Contract note is printed and mailed in 24 hours
•
Settlement will take place automatically on the settlement day
•
Demat account and the bank account will get debited and credited by electronic means.
Online trading has led to additional features such as:
Limit / stop orders: orders that can be go unfilled, but there is an extra Charge for this leeway facility since one need to hold a price.
Market orders: orders can be filled at unexpected prices, but this type is much more risky, since you have to buy stock at the given price.
Cash account: where funds have to be available prior to placing the order.
Margin account: where orders can be placed against stocks, to increase Purchasing power.
Advantages of online trading: •
Online trading has made it possible for anyone to have easy and efficient access to more reports and charts than it was previously possible if one went to any brokers' office. Thus, we have access to a lot more information online to self teaches our broker itself.
51
•
Online trading has let room for smaller organizations to compete with multinational organizations since is no longer a legit issue. Being online does not identify the size of any particular organization, therefore, this additional power to the underdogs.
•
Online trading has allowed companies to locate themselves where they want, as physical location is not an issue anymore. Companies can establish themselves according to their gains and losses, for instance where tax (sales and value added taxes) is best suited to them.
•
Online trading gives control to individuals and they can exercise it over accounts thus comprehend what is going on when they trade. It is like going back to school and reeducating oneself on how to trade online.
•
Individuals benefit by saving comparatively a lot more when trading online as the
cost per trade is less. •
Individuals can invest in a variety of pr oducts, unlike earlier when people bought bonds, mutual funds, and stock for long-term basis and sat on them. Now they can invest in stocks, stock and index options mutual funds, individual, government, and even insurance.
•
Online trading has made it possible for one fid investment options that were not available on a regular basis like offbeat net stocks eccentric unique things and trading in global market.
Investor’sreasons •
to trade online:
They have control over their accounts can make their own decisions and dont have to give reasons for their actions. They are independent.
•
They have a reason to participate in the market and learn about it.
•
It interesting, cheap, easy, fast, and convenient.
•
A lot of informatio n is online so they can keep up-to-date with what is happening in the trading world.
•
It is the interest of the small investors because rates will be available immediately across the country execution will be immediately across the country and execution will be immediate.
•
It will give investors a greater choice and better realization.
•
The immediate impact will be competition and benefits will accrue to the investors.
52
•
It will lead to brokerage commissions going down and brokers striving to increase business afloat.
•
Investors will now go to place, which have better trading conditions and also members to offer them better facilities.
•
They have access to numerous tools to invest, and can create their own portfolio.
Here are the possible disadvantages: •
When network crashes, there will be problems and delays due to a large influx of rapid online trading criteria.
•
Individuals are restricted to first-hand financial guidance. This simply means that the individual is himself / herself alone to.
•
A tax (sales tax and value added tax) evaluation becomes an issue, especially when you are trading internationally.
•
Chances are that one has no idea who one is dealing with on the other end, so it is advisable to gather all the possible information about the party one is dealing with. In short, do the home work and be prepared.
•
Online trading has left individuals open to too much information. This is harmful since it leaves brokerages wide open to sensitive data.
•
According to a study conducted by Mary Rowland, careful investor: is online trading bad for your portfolio, the more one trades the less returns one gets, meaning that an addicted trader gets, carried away online and begins to trade for too much which causes losses for him / her.
•
The study also shows that smart investment is better than fast investment. Simply put speed should be considered to be a major factor would lead any online trader to think they know the market.
•
Individuals think that they are trading with the market directly and know what they are doing, but the truth is that even th rough technology has taken over the basic rules of trading are the same. It seems that the middleman has been removed, but that is not so. When the individuals click on the mouse, his trade goes through a broker. The commissions online pertain to the intermediary.
•
There is a need for more effective communication links over the Internet and the ability of the server to deal with a large volume of visitors.
53
3.17. TRADING AND SETTLEM ENT AT SHARE KHAN The NSE first introduced online trading in India. The
Online trading system imparted a
greater level of transparency and investors preferred exchanges that offered Online trading because of the following factors: •
The ease of operation from the view of the both members and the investors.
•
•
Increase in the confide nce of the investors because at higher level of transpar ency. Facilities better monitoring of the market by the exchange.
•
The best price achieved in buying and selling.
All these resulted in ever-increasing volumes on the exchanges offering the online trading.
3.18 TRADING PROCEDURE AT SHARE KHAN STOCK BROCKING Share Khan deals in buying and selling equity shares and debentures on the National Stock Exchange (NSE), the Bombay Stock Exchange (BSE) and the Over-The-Counter Exchange of India (OTCEI). Share Khan is provided with a computer and required software from their registered stock exchanges. These centres are called “Broker Work Stations”. These computers are connected to the server at the stock exchanges through cable.
The member or broker sitting in his office can send the quotations, orders, negotiations, deals, in-house deals, auction orders etc., through the computer.The central trading system (CTS) will accept these orders and send it for match. If there is any mistake in the order, CTS will reject the orders and send respective error message to the member concern. All these operations are in built. The main objective of CTS is to monitor the Stock Exchanges operations. Order placed by the broker will be sent for a match and if the match is found suitable, the transaction will be executed. Otherwise, the order will be deleted automatically after completion of trading time the carry forward transactions (Good Till cancellation) are forward to the next day. Even if the match is not found with in the prescribed period, the order will not cancel.
54
3.18.1 Trading session:
Trading timings are from 9:55 A.M. to 3:30 P.M. on all 5 days of the trading period. Monday to Friday is the trading period in all the stock exchanges. SEBI has stipulated that all the stock exchanges in India must have same trading period. 3.18.2 Broker work station:
At the broker workstation the best BBOs the last traded price, the day ‘s opening price, previous days closing price, highest and lowest prices, the weighted average price, the total
trade value and total trade value will be availab le continuously, as the BBO for each scrip. Other information will be available on query from the BWS. These include top gainers /losers of the day. Trader-wise, scrip wise net position, client wise net position, top scrip by the volume/value, market summary etc. The BWS as a powerful profiling future which enables each trader to customize his/her screens layouts as is convenient, profiles may be set at the BWS by the individual users, for the scrips that he/she is interested in watching columns of information available, etc.
Brokers are also provided with information relating to the companies in the matter of Book closure, Dividend declarations, resolutions in board meeting, information about liquidated companies, company report etc. Broker can visualize his personal details relating to trade done he can have scrip wise details, sub-broker wise details, and client-wise details and can also take the point of daily volume reports and adjustment reports. 3.18.3 Orders:
Orders can be done one at a time or in a batch mode. Th e submitted order w ill be accepted at the CTS after validation if found any invalid reason the order is return back to the BWS, with the appropriate error message. If Accepted at the CTS it will be added to the local pending order book. The order will then be taken up for matching if it is a buy order the system tries to find a sell order, which fits the requirement of the buy order when such match is found a trade, gets executed. Each trade involves two brokers and respective traders who sent the order. Both these traders are informed of the trade being executed at their respective BWS.
55
At the BWS the trade is added to the local trade book, land the pending quantity decreased by the trade quantity in the local pending order book. Orders sent by the brokers are two types : •
Good For the Day (GFD)
•
Good Till Cancellation(GTC)
Good for the Day:
This also called as “market order”. For an order if the member selects the deal as good for
day, the order is treated as market order. If a “best bid” founds match with “best order” then the transaction executes. If the match is not found then after trade time the order is cancelled that day. Next day he has to place a new order. For example if a memb er wants to purchase 1000 share s of satyam info @ 400, each through Good for Day order. If the correct match is not found, order is cancelled automatically and new quotation has to be placed the next day. 3.18.4 Good till cancellation:
This order is forwarded to the last trading day of that settlement period. This is also called as carry forward order like GFT; broker has to select the option of GTC for the order. If the order finds match with in the trading settlement period, the order is executed. If no match is found, the order is cancelled on the last day of settlement period. This order is not carried forward to the next settlement period. For example, if a member places a purchase order of 500 shares of SBI @ 690 per share, selects the order as GTC, and plac es an order. If the matc h is not found on that day it will be forwarded to the next day until trading settlement period day. 3.18.5 Settlement of transactions:
Clearing of transaction in the form of shares and cash is called settlement, which was held in clearing house of stock exchange (for example, SHAREKHAN is a clearance house is member in NSDL (National Securities Depository Limited). Buyers will take the delivery of shares through the Depository Participants (DPS) like SHARE KHAN and others. Finally,
the settlement is made by means of delivering the share certificates along with the transfer deeds. The transferor (or the seller) duly signed transfer deed. It bears a stamp of the selling
56
broker. The buyer then fills up the certificates fills up the particulars in the transfer deed. Settlement can be done in the following way. •
Spot settlement: under this method, the delivery of securities and payment for them are
affected on the day of the contract itself. •
Rolling settlement: Under this rolling settlement the trading is on “T+2”,basis i.e. if
Monday is trading day then Wednesday is the paying day . In case on non-delivery, the securities will go for auction. 3.18.6 Details of procedures: Delivery in : The members who is in PAY-OUT position delivers share certificates in to
clearing house with in the settlement perio d along with the delivery Chelan filled in with the details of share certificates which has folio numbers or distinctive numbers etc. Delivery out: The buyer of shares who made pay in position will take delivery of shares from
the clearinghouse. Pay-in: The member who is in paying position shall pay for value of shares within the
trading settlement period (T+2). Payout: The cheques paid in the clearinghouse will be paid members who are in paying
position. All disputes arising between members regarding non-deliveries, non-payments, good and bad deliveries pertaining to the settlement will be here by Share Khan and settled by the settlement committee of the exchange.
Sharekhan provides offline trading too. For this sharekhan is providing a toll-free number i.e. 1-800-22-7500.
57
The given flow chart clearly explains the process of onli ne trading:
Login
Sell transcation
Buy transcation
The system will check your dp account quan tity
The system will check buying limits
Orders accepted
Rejected orders would be communicated along with reasons
orders accepted
your order is transmitted to exchange for execution
pending buy orders would be displayed on your screen
onyour execution of orders
you may edit your you may delete pending order your pending order
flashed on your screen immediately on execution
you may edit your pending order
conformationcoul d be send to your e-mail and mobile
58
pending sell orders would be displayed on your screen
you may delete your pending order
contract note would be sent to by mail or hand delivery
THE WINDOW WHICH DISPLYAS IS BUYING SHARES ONLINE THROUGH TRADE TIGER SOFTWARE
59
THE WINDOW WHICH DISPLYAS IS SELLING SHARES ONLINE THROUGH TRADE TIGER SOFTWARE
60
3.18.7 Surveillance:
Surveillance can be done during the continuous trading session for monitoring the broker scrip and the market, this is referred to as online may be used for analysis. Analysis and monitoring reports that can generate. For the continuous trading session the surveillance workstation user can set up a member of alerts any scrip broker or index the workstation profile will be automatically reported to the user. The market event list will be available to the BWS user. During the continuous trading session details of the scrip broker or index that pass the alert or violate their circuit breakers are displayed on message window. There are three messages windows i.e., one for each scrip and index, different colors indicate the importance and BWS user is modified when BWS user is denied access to the system a number of are available for the SWS user.
3.19 PROBLEM AREAS: When internet trading was first launched in Feb. 2000, the stock markets were experiencing an unprecedented boom and it held out a lot of promise. However, two years down the line we find the system as failed to deliver up to its potential. The main reasons for declining volume of trading are:
Bearish market:
The poor performance in the on line market segment can be attributed to lack of Bull Run in the stock market. This is the reason for which the overall trading as come down. Almost ever since internet trading has started the markets have remained bearish. This relationship between the mood of the market and the internet in trading indeed gets reflected in the volumes. Poor penetration of the internet:
Besides the bearishness in the equity market, another reason for low acceptance of net trading could be poor penetration of the internet. In India it is a fact that internet has not been able to spread its tentacles in rural areas and small towns. The very basis of net trading is based on two factors: 1. An equity market in good shape. 2. Deep penetration of th e internet.
61
Poor internet connectivity:
In the Indian context, the quality of internet connections also comes into play for determining the reasons for the lack in response. Here, we have connectivity problems and there are instances of clients panicking, as they could not execute their trades. Many times at particularly at places other than Mumbai, sudden stoppage of electricity results in disconnection.
Long supply chain:
In case of conventional or offline, trading the chain is small as the clients directly interact with the brokers. However, in case of intern et trading the chai n is quite long as it involves a client, an internet service provider, server, stock exchange, depositor and a broker and a problem can rise up at any stage of the chain, breaking down the entire system.
A Costly Affair:
Other than the technological hassles, there is an element of cost as well. For active traders, doing online trading he has to remain connected all the time and the cost of connecting through dial up can work out to Rs 3500 per month which is over and above the brokerage and other service charge s. This is the reason offering online trading facili ty Allows the clients to use the conventional system as well in order to retain them. A part from a dealing room, most broking houses have a separate room for the clients. Where the stock exchanges terminals are kept for their use.
Low Investor Confidence:
The global recession has dampened the mood of the stock market. Although, the US economy is showing signs of recovery, but any tangible outcome is yet to be felt and natural calamities.
62
3.20 SWOT ANALYSIS OF SH AREKHAN (Our observation) STRENGTHS
1. Big client base 2. In-house research house 3. online as well as offline trading 4. Online IPO/ MF services 5. Share shops 6. Transparent 7. User friendly tie ups with 10 banks 8. Excellent order executio n speed and reliability WEAKNESS
1. Lack of awareness among customer 2. Less focus on customer retention 3. Less Exposure OPPORTUNITIES
1. Diversification 2. Product modification 3. Improve Web based trading 4. Provide competitive brokerage 5. Concentrate on PMS 6. Focus on Institutional investors 7. Concentrate on HNIs (high net worth investor) THREATS
1. Aggressive promotional strategies by close competitor like Religare, Angel Broking and India bulls. 2. More and more players are venturing into this domain, which can further reduce the earning of Share Khan. 3. Stock market is very volatile, risk involves is very high.
63
4.1 INTRODUCTION OF INVESTMENT
64
An asset or item is that which is purchased with the hope that it will generate income or appreciate in future. In an economic sense, an investment is the purchase of goods that are not con sumed today but are used in future to create wealth. In finance an investm ent is a monetary asse t purchased with the idea that the asset wi ll provide income in the future or apprec iate and be sold at higher pric e. 4.1.1 Characteristics of investment : •
Tax benefit
•
Stability of income
•
Return
•
Marketability
•
Liquidity
•
Safety
•
Capital growth
•
Risk
•
Purchasing power of stability
4.2 INVESTMENT AVENUES Each investment alternatives has its own strength and weakness. Some options seek to achieve superior return (like equity), but with corresponding higher risk. Other provide safety (like PPF), but at the expense of liquidity and growth. Other options such as FDs offers safety and liquidity, but at a cost of return. Mutual funds seek to combine the advantages of investing in arch of these alternatives while dispensing with shortcomings.
4.3 DIFFERENT INVESTMENT ALTERNATIVES IN INDIA 1. Equity shares 2. Bonds 3. Mutual funds 4. Life insurance 5. Fixed deposits
Investment alternatives in India
65
1. Eq uity shares
These are shares of company and can be traded in secondary market. Investors get benefit by change in price of share and dividend given by companies. Equity shares represent ownership capital. As an equity shareholder, a person has an ownership stake in the company. This essentially means that the person has a residual interest in income and wealth of the company. 2. Bonds
Bonds are the instruments that are considered as a relatively safer investment avenues. 3. Mutual Funds
A mutual fund is a trust that pools together the savings of a number of investors who share a common financial goal. The fund manager invests this pool of money in securities, ranging from shares, debentures to money market instru ments or in a mixture of equity and debt , depending upon the objective of the schemes. 4. Life insurance
Now-a-days life insurance is also being considered as an investment avenue. Insurance premiums represent the sacrifice and the assured sum the benefit.
5. Fixed deposits In deposit terminology, the term Fixed Deposit refers to a savings account or certificate of
deposit that pays a fixed rate of interest until a given maturity date. Funds placed in a Fixed Deposit usually cannot be withdrawn prior to maturity or they can perhaps only be withdrawn with advanced notice and/or by having a penalty assessed.
66
AGE
67
Table-1 Age
Frequency Valid
18-25 yrs 26-35 yrs 36-50 yrs above 50 yrs Total
Percent
Valid Percent
26 29 37
26.0 29.0 37.0 8 8.0 100 100.0
26.0 29.0 37.0 8.0 100.0
Cumulative Percent 26.0 55.0 92.0 100.0
Chart-1
Interpretation
From the research, researcher concludes that there are there are 37% respondents between the age group of 36-50 yrs and least i.e. 8% above 50 yrs.
GENDER 68
Table-2 Gender
Frequency Percent Valid Male Female Total
79 21 100
Valid Percent
79.0 21.0 100.0
79.0 21.0 100.0
Cumulative Percent 79.0 100.0
Chart-2
Interpretation
From the research, researcher concludes that there are 79% responde nts are male and 21% respondents are female.
OCCUPATION
69
Table-3 Occupation
Frequency Percent Valid Student Professional Service Businessman Housewife Retired Total
Valid Percent
Cumulative Percent
6 14 49 16
6.0 14.0 49.0 16.0
6.0 14.0 49.0 16.0
6.0 20.0 69.0 85.0
12 3 100
12.0 3.0 100.0
12.0 3.0 100.0
97.0 100.0
Chart-3
Interpretation
From the research, researcher conclude s that majority respondent s are from service class and 3% respondents are from retired class.
ANNUAL INCOME
70
Table-4 Annual Income
Frequency Percent Valid Percent ValidB elow 150000 150000-300000 300000-400000 Above 400000 Total
32 29 24 15 100
32.0 29.0 24.0 15.0 100.0
32.0 29.0 24.0 15.0 100.0
Cumulative Percent 32.0 61.0 85.0 100.0
Chart-4
Interpretation
From the research, researcher concludes that there are 32% respondents from the income class of below 150000 and 24% respondents are from the income class of 3000 00-400000.
MARITAL STATUS
71
Table-5 Marital Status
Frequency Percent ValidM arried Unmarried Total
71 29 100
Valid Pe rcent
71.0 29.0 100.0
71.0 29.0 100.0
Cumulative P ercent 71.0 100.0
Chart-5
Interpretation
From the research, researcher concludes that there are 71% respondents married and 29% respondents are unmarried.
NUMBER OF FAMILY MEMBERS
72
Table-6 No. of Family Members
Frequency Valid 1-3 4-6 6-8 Total
42 53 5 100
Percent
Valid Percent
42.0 53.0 5.0 100.0
42.0 53.0 5.0 100.0
Cumulative Percent 42.0 95.0 100.0
Chart-6
Interpretation
From the research, it is conclude d that 42% respondent s have family of 1-3 members, 53% respondents have family of 4-6 members, and 5%have 6-8 members in family.
NUMBER OF EARNING MEMBERS
73
Table-7 No. of Earning Members
Frequency Percent Valid 1 2 3 4 Total
Valid P ercent
38 53 5 4
38.0 53.0 5.0 4.0
38.0 53.0 5.0 4.0
100
100.0
100.0
Cumulative Percent 38.0 91.0 96.0 100.0
Chart-7
Interpretation
From the research, it is concluded that 38% respondents have 1 earning member, 53% respondents have 2 earning members, 5% have 3 and 4 %have 4earning members in family respectively.
Question-1: Have You Been Into Any Investment Plan?
74
Table-8
Have you been into any Investment Plan?
Frequency Percent Valid yes No Total
84 16 100
Valid Percent
84.0 16.0 100.0
Cumulative Percent
84.0 16.0 100.0
84.0 100.0
Chart-8
Interpretation
From the research, it is concluded that 84 % have Investment Plan and 16 % ha ve not any Investment Plan.
Question-2: In Which Segment Have You Invested?
75
Table-9 Particulars
Numberof
Particulars
Numberof
respondents
Equity
respondents
70
Mutual Fund
Insurance
32
Bank FD
Commodities
34
Bonds Debenture
17
Real Estate 4 1
PublicProvidentFund
52
14
Gold And Silver PostOfficeSavings
12
21 15
OtherGovt.Securities
4
Chart-9 80 70 70 60 52 50 40
32
34
30 21 17
20 12 10
4
14
15 4
1
0
Interpretation
From the research, it is concluded that most of the respondents were aware about Equity and insurance .the graph shows the percentages regarding peoples investment in particular Investment Avenue.
Question-3: At Which Rates Do You Want Your Investment To Grow?
76
Table-10 At which rat es do you want your in vestment to grow?
Frequency Percent Valid Percent Cumulative Percent Valid
Steadily Atanaveragerate At fast a rate
Total MissingS ystem Total
28 43 13
28.0
43.0 13.0 84 16 100
84.0 16.0 100.0
33.3 51.2 15.5
33.3 84.5 100.0
100.0
Chart-10
Interpretation
From the research, it is concluded that 51.19% respondent want average growth rate and 33.33% respondent want steady growth rate and 15.48% respondent want fast growth rate for their investment.
77
Question-4: How Frequently Do You Invest? Table-11 How frequent do you Invest?
Frequency Percent Valid
Daily Weekly Monthly Yearly Total Missing System Total
16 17 43 8 84 16 100
Valid Percent
16.0 17.0 43.0 8.0 84.0 16.0 100.0
19.0 20.2 51.2 9.5 100.0
Cumulative Percent 19.0 39.3 90.5 100.0
Chart-11
Interpretation
From the research, it is concluded 16% respondent invests daily, 17% respondent invests weekly, and 8% respondents invests yearly. Most of the respondents i.e. 43% invest monthly.
78
Question-5: What Percentage Of Your Annual Income Do You Invest In Share
Market? Table-12 What percentage of your annual income do you invest in share market?
Frequency Percent Valid
Up to 10% 10-15% 15-20% More than 20% Total Missing System Total
29
29.0 21 21.0 25 25.0 9 9.0 84 84.0 16 16.0 100 100.0
Valid Percent 34.5 25.0 29.8 10.7 100.0
Cumulative Percent 34.5 59.5 89.3 100.0
Chart-12
Interpretation
From the research, it is concluded 29% invests up to 10%, 21% invest 10-15%, 25% invests 15-20%, and 9% invests more than 20% o f their annual income.
79
Question-6: By Which Source Of Information You Came To Know About
Particular Option? Table-13 particulars
Numberofrespondents
Self
44
FriendsAndRelatives
26
Service Providers And Consultants
18
Newspapers, Magazines And Advertisements
41
Agents
30
Workshops&Seminars
9
Chart-13 50 45 40 35 30 25 20 15 10 5 0
44
41 30 26 18 9
Interpretation
From the research, it is concluded that most of the respondent gets information regarding Investment Avenue available in the market on their own (self) and least through workshop.
80
Question-7: Which Factor Do You Consider Before Investing In Share Market Table14 particulars
Numberofrespondents
CapitalAppreciation
37
Maturity Period
27
SafetyOfPrincipal
25
Risk
39
ReturnOnInvestment
48
Tax Benefits
13
Liquidity
11
Chart-14
60 48
50
40
39
37
27
30
25
20 13
11
10
0 capital appreciation
maturity period
safty of principal
risk
return on investment
tax banifits
liquidity
Interpretation
From the research, it is concluded that most of the respondents prefer return on inve stment before making any investment and least preferred is liquidity.
81
Question-8: In Your Opinion, What Would Be The Optimum Strategy If Stock
Market Drops Immediately After You Invest In It? Table-15
In your opin ion, what w ould be the optimum strategy if you invest in it?
Frequency Percent Valid P ercent Valid
Cut your losses and transfer funds
Cumulative Percent
24
24.0
28.6
28.6
44
44.0
52.4
81.0
13
13.0
15.5
96.4
3
3.0
3.6
100.0
84.0 16.0 100 System
100.0
into secure markets Wait to see if investment improves stock market drops immediately Invest more funds to lower your losses expecting future growth Withdraw your funds and stop investing
84
Missing Total
Total
82
Chart-15
Interpretation
From the research, it is concluded that maximum respondent Wait to see if investment improves stock market drops immediately and that are 44%.
83
Question-9: Do You Have Any Other Investment Policy? Table-16
Do you have any other inve stment policy?
Frequency Percent Valid
Yes
No Total Missing System Total
Valid Percent
Cumulative Percent
16
16.0
19.0
19.0
68 84 16 100
68.0 84.0 16.0 100.0
81.0 100.0
100.0
Chart-16
Interpretation
From the research, it is concluded that 16% respondents have othe r investment policy a nd 68% respondents have not other in investment policy.
84
Question-10: Rate the Satisfaction with the Return Generated By Your
Investment Option? Table-17 Shares
325
Mutual Fund
214
Bonds
140
Debentures
139
Derivatives
175
Chart-17
350
325
300
250 214 200
175 140
150
139
100
50
0 share
mf
bonds
debenture
derivatives
Interpretation
From the research, it is concluded share gives highest return and bonds gives lowest return.
85
Question-11: Rate the Satisfaction with the Factors That Was Considered
While Investing? Table-18 Return On
Investment
TaxBenefits
280 171
Capital Appreciation
235
MaturityPeriod
189
Risk
212
Safety Of Principal Liquidity
197 133
Chart-18 300
280 235
250
212 189 200
197
171 133
150 100 50 0
Interpretation
From the research, it is concluded that most of the respondents are satisfied with return on investment and then capital appre ciation then risk then safe ty then maturity per iod then tax benefit then at last liquidity.
86
Question-12: You Are Aware About Following Brokers? Table-19 Share Khan
74
AngelBroking
62
AnandRathi
46
KotakSecurities Others
18 46
Chart-19
80 74 70 62 60
50
46
40
30 18
20
14 10
0 sharekhan
angel broking ko tak securities
other
anand rathi
Interpretation
From the research, it is concluded that large share of respondent is aware about sharekhan then angel broking then kotak securities. 87
Question-13: In Broking What Is More Important For You? Table-20 In Broking what is more important for you?
Frequen cy Valid
Costofbroking BrokersAdvice Total Missing System Total
55 29 84 16 100
Percent 55.0 29.0 84.0 16.0 100.0
Valid Percent 65.5 34.5 100.0
Cumulative Percent 65.5 100.0
Chart-20
Interpretation
From the research, it is concluded that cost of broking is 55% so respondent give more importance to cost of broking.
88
Question-14: The Basis Of Your Past Decision Will You Further Invest?
Table-21 On the basis of your past decision will you further invest?
Frequency Percent Valid
Yes No Total
Missing System Total
78 6 84
78.0 6.0 84.0
16 100
16.0 100.0
Valid Percent 92.9 7.1 100.0
Cumulative Percent 92.9 100.0
Chart-21
Interpretation
From the research, it is concluded 78% respondent will inves t further and 6% will not.
89
HYPOTHESIS ANALYSIS 1:-Relation between age and investment plan
H0: age is not related to any investment plan. H1: age is related to any investment plan.
Case Processing Summary
Cases Valid N Age * Have you been into any Investment Plan?
Missing
Percent
100
N
100.0%
0
.0%
Age * Have you been into any Investment Plan? Cross tabulation
Count Have you been into any Investment Plan? yes Age
Total
18-25 yrs 26-35 yrs 36-50 yrs above 50 yrs
no
23 26 30
Total 3 3 7
26 29 37
5
3
8
84
16
100
90
Total
Percent
N 100
Percent 100.0%
Chi-Square Tests
Value Pearson Chi-Square LikelihoodRatio Linear-by-Linear Association NofValidCases
4.061 a 3.569 2.709
Asymp. Sig. (2-sided)
df 3 3 1
.255 .312 .100
100
a. 3 cells (37.5%) have expected count less than 5. The minimum expected count is 1.28.
Interpretation 2
x tabulated value > calculated value
2
x tabulated value =7.815
From the above calculation you can see that tabulated value is higher than the calculated value so H0 is accepted and H1 is rejected . which means there is no relationship betw een age and investment plan.
91
2:-Relation betwee n gender and investm ent plan.
H0: gender is not related to any investment plan. H1: gender is related to any investment plan.
Case Processing Summary
Cases Valid N Gender * Have you been into any Investment Plan?
100
Missing
Percent
N
100.0%
0
Gender * Have you been into any Investment Plan? Cross tabulation Count
Have you been into any Investment Plan? yes Gender Male Female Total
no 69 15 84
Total 10 6 16
92
Total
Percent
79 21 100
.0%
N 100
Percent 100.0%
Chi-Square Tests
Value Pearson Chi-Square Continuity Correctionb Likelihood Ratio Fisher's Exact Test Linear-by-Linear Association NofValidCases
3.126 a 2.054 2.792
Asymp. Sig. Exact Sig. (2(2-sided) sided)
df 1 1 1
.077 .152 .095 .097
3.095
1
Exact Sig. (1-sided)
.081
.079
100
a. 1 cells (25.0%) have expected count less than 5. The minimum expected count is 3.36. b. Computed only for a 2x2 table
Interpretation 2
x tabulated value > calculated value
2
x tabulated value =3.841
From the above calculation you can see that tabulated value is higher than the calculated value so H0 is accepted and H1 is rejected. which means there is no relationship between gender and investment plan.
93
3:-Relation between occupation and investment plan.
H0: occupation is not related to any investment plan. H1: occupation is related to any investment plan.
Case Processing Summary
Cases Valid N Occupation * Have you been into any Investment Plan?
Missing
Percent
100
N
Total
Percent
100.0%
0
N
.0%
Percent
100
100.0%
Occupation * Have you been into any Investment Plan? Cross tabulation
Count Have you been into any Investment Plan? yes no Occupation Student
Total
3
3
6
Professional
13
1
14
Service
42
7
49
Businessman
16
0
16
9
3
12
1 84
2 16
3 100
Housewife Retired Total
Chi-Square Tests
PearsonChi-Square Likelihood Ratio Linear-by-LinearAssociation NofValidCases
Value 15.586 a 14.905 .104 100
df
Asymp.Sig.(2-sided) 5 5 1
.008 .011 .747
a. 6 cells (50.0%) have expected count less than 5. The minimum expected count is .48.
94
Interpretation 2
x tabulated value < calculated value
2
x tabulated value =11.070
From the above calculation you can see that tabulated value is higher than the calculated value so H0 is rejected and H1 is accepted. This means there is relationship between occupation and investment plan.
95
4:- Relation between occupation and any percent of annual income invest in share market.
H0: occupation is not related to any percent of annual income invest in share market. H1: occupation is related to any percent of annual income invest in share market. Case Processing Summary
Cases Valid N Occupation * What percentage of your annual income do you invest in share market?
Missing
Percent 84
N
84.0%
Total
Percent 16
N
16.0%
100
Percent 100.0%
Occupation * What percentage of your annual income do you invest in share market? Cross tabulation Count
What percentage of your annual income do you invest in share market? Upto10% Occupation
More than 20%
15-20%
Total
Student
1
1
0
1
3
Professional
5
2
3
3
13
14
10
14
4
42
Businessman
5
6
4
1
16
Housewife
4
2
3
0
9
0 29
0 21
1 25
0 9
1 84
Service
Retired Total
10-15%
96
Chi-Square Tests
Value PearsonChi-Square Likelihood Ratio Linear-by-LinearAssociation N of Valid Cases
10.392 11.313 .565 84
df a
Asymp.Sig.(2-sided)
15 15 1
.794 .730 .452
a. 20 cells (83.3%) have expected count less than 5. The minimum expected count is .11.
Interpretation 2
x tabulated value > calculated value
2
x tabulated value =24.996
From the above calculation you can see that tabulated value is higher than the calculated value so H0 is accepted and H1 is rejected, which means there is no relationship between occupation and any percent of annual income invest in share market.
97
5:- Relation between oc cupation and any per cent of annu al income inv est in share market.
H0: annual income is not related to any percent of annual income invest in share market. H1: annual income is relat ed to any percent of annual income invest in share market.
Case Processing Summary
Cases N Annual Income * What percentage of your annual income do you invest in share market?
Valid Percent 84
N
Missing Percent
84.0%
16
N
16.0%
Total Percent 100
100.0%
Annual Income * What percentage of your annual income do you invest in share market? Cross tabulation Count
What percentage of your annual income do you invest in Up to 10% Annual Income
Below 150000
5
7
More than 20%
13
Total
1
26
150000-300000
11
5
5
1
300000-400000
10
4
4
3
Above 400000 Total
share market? 10-15% 15-20%
3
5 29
3 21
98
4 25
22 21 15
9
84
Chi-Square Tests
Value Pearson Chi-Square LikelihoodRatio Linear-by-Linear Association NofValidCases
17.018 a 16.332 .032
Asymp. Sig. (2-sided)
df 9 9 1
.048 .060 .858
84
a. 6 cells (37.5%) have expected count less than 5. The minimum expected count is 1.61.
Interpretation 2
x tabulated value > calculated value
2
x tabulated value =16.919
From the above calculation you can see that tabulated value is higher than the calculated value so H0 is accepted and H1 is rejected, which means there is no relationship between annual income and any percent of annual inc ome invest in share ma rket.
99
6:- Relation between age and optim um strategy.
H0: age is not related to any optimum strategy H1: age is related to any optimum strategy.
Case Processing Summary
Cases Valid N Age * In your opinion, what would be the optimum strategy if you invest in it?
Missing
Percent 84
N
84.0%
Total
Percent 16
N
16.0%
Percent
100
100.0%
Age * In your opin ion, what w ould be the optimum strategy if you inv est in it? Cross tabulation Count
In your opinion, what would be the optimum strategy if you invest in it? Cut your losses and transfer funds into secure markets Age
Withdraw your funds and stop investing
Total
18-25 yrs
4
13
4
2
23
26-35 yrs 36-50 yrs
3 15
16 13
6 2
1 0
26 30
above yrs 50 Total
Wait to see if Invest more investment funds to improves lower your stock market losses drops expecting immediately future growth
2
2
1
24
44
100
0 13
5 3
84
Chi-Square Tests
Value Pearson Chi-Square LikelihoodRatio Linear-by-Linear Association NofValidCases
15.345 a 16.427 7.928
Asymp. Sig. (2-sided)
df 9 9 1
.082 .058 .005
84
a. 10 cells (62.5%) have expected count less than 5. The minimum expected count is .18. Interpretation 2
x tabulated value > calculated value
2
x tabulated value =16.919
From the above calculation you can see that tabulated value is higher than the calculated value so H0 is rejected and H1 is accepted. which means there is relationship between age and optimum strategy.
101
6.1 FINDINGS
102
6.1.1 General Findings •
People invest wisely considering return on investm ent.
•
Need for understanding regarding capital appreciation and other factors of financial management and planning.
•
People do have a clear view over investme nt opportunities in the market.
•
Investors perceptions on investment ar e varying across all age group .
•
A large majority of s ervice peoples prefer to invest in equity and other.
6.1.2 Specific Findings •
There are 37% of respondent in the age group betw een 26-35 and least i. e. 8% of respondent above 50.
•
There are 79% of respondents are male and 21% of respondents are female.
•
Majority of respondents are of service class and 3% of respondent are retired.
•
Majority of respondent earns monthly m ore than below 150000 i.e. 32% and least no. of respondent earns less than 400000 i.e. 15%.
•
•
•
There are 84 % who have Investment Plan and 16 % have not any Investment Plan. Most of the respondent gets information regarding financial instrument available in the market through self analysis and least through work shop. 29% respondents invest in financial instrument below 10% and 9% of respondents invest more than 20%
•
Maximum numbers of respondents wants to invest monthly year in any financial instrument .
•
Most of the respondents prefer return on investment before making any investment than interest rates.
•
29% of respondents are willing to take advice from the brokers than cost of broking before making investment in any of the financial instrument.
•
74 0f respondent know about share khan,62 knows about angel broking, 14 knows about Anand Rathi, 46 knows about Kotak securities,18 knows about other broker such as ICICI securities ,bonanza ,marvadi, IIFL etc.
103
104
7.1 Better analysis tools should be used to make better prediction s. •
It is recommended that investors decision should be based on their broker advice.
•
Risk and return should be evaluated before making an investment decision.
•
There should be a regular SMS updates to the investors regarding their investment.
•
Client awareness program ha s to be conducted by sharekhan on weekly basi s instead of quarterly basis to provide up to date information.
•
Some people are aware about investment avenues but most of the respondents they dont have sufficient knowledge regarding bonds and commodities.
•
Financial institutions should create awareness about available avenues for investment and have to tell the people what is the meaning of risk and how it could be mitigated.
•
Government should stress the financial institutions to conduct investor guidance workshops about available avenues for investment.
•
There is a need for financial literacy and instilling confidence among investors.
•
They should also educate the Indian population both on ways of meeting their financial objectives through financial protection and wealth creation.
•
To overcome the problem faced by the investors, adequate policy reforms in financial sector is the need of the hour. Hence, the study may be considered that the awareness about the avenues for investment which will lead the investor in the future.
105
106
8.1 CONCLUSIONS In the current scenario, investing is very important and investing in stock markets is a major challenge ever for service people. The young people should start investing earli er so that they can reap the benefits of investing in future. People should keep their eye open and keep updating themselves about various investment avenues so that they can get safe returns. The study also draws an important conclusion from the study that the investors are a keen to invest in long term and less risk products, much interested to earn the good return on their investments. Investors are aware about the fact or affecting thei r short term as well as longterm investment plans and they do take advice from different experts, self-analysis by investors themselves. This intensive study will somehow help investors in deciding the correct investment for their savings.
107
108
BIBLIOGRAPHY
www.sharekhan.com
www.economictimes.com
www.moneycontrol.com
www.bseindia.com
www.nseindia.com
www.sebi.gov.in
www.investors.com
http://www.ncdex.com/Aboutus/profile.aspx
http://www.mcxindia.com/aboutus/aboutus.htm
https://www.google.co.in/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ve d=0CB0QFjAA&url=http%3A%2F%2Fwww.sharekhan.com%2Fupload%2Fnewsletter%2Fvalue guide.pdf&ei=I77LU8W4IsqyuASF1oGQCw&usg=AFQjCNGNmq4U5JHUI5qepMr544CZKq5dQ
www.investopedia.com Previous project reports News Papers Sharekhans brochures Sharekhans value Guide
109
110
.
QUESTIONNAIRE ON
Investors Preference towards Investment Avenues I Am A Student Of MBA At N R Institute Of Business Management, Ahmadabad. I Am Conducting a Research Study On “An Analysis On Investors Preference On Various Investment Avenues”. This rsearch (Project) Is Taken As A Partial Requirement For The Completion Of My MBA. I Seek Your Kind Assistance In Completing the Questionnatire.
Personal Information: Name :_____________________________________________ _____________________ Age : 18-25 Yrs 26-35Yrs 36-50 Yrs Above 50 Yrs Gender :
Male
Occupation :
Female ional Profess Retired
Student Housewife
Annual Income :
Service
Below 150000
150000-300000
300000-400000 Marital Status :
Businessman
Above 400000
Married
Unmarried
No. Of Family Members :
1-3
4-6
6-8
More then 8
No. Earning Members :
1
2
3
4
Questions: 1. Have You Been Into Any Investment Plan? Yes No 2. In Which Segment Have You Invested? Equity Mutual Fund Bank FD Bonds Debenture Public Provident Fund
Insurance Commodities Real Estate Gold And Silver Post Office Savings Other Govt. Securities
3. At Which Rates Do You Want Your Investment To Grow? At An Average Rate Steadily
At Fast Rate
4. How Frequently Do You Invest? Daily Monthly
Weekly Yearly
5. What Percentage Of Your Annual Income Do You Invest In Share Market? 15-20% Up To 10% 10-15%
More Than 20%
6. By Which Source Of Information You Came To Know About Particular Option? Self Friends And Relatives
Agents
Service Providers And Consultants
Workshops & Seminars
Newspapers, Magazines And Advertisements
111
7. Which Factor Do You Consider Before Investing In Share Market? Capital Appreciation
Liquidity
Risk Return On Investment
Maturity Period Safety Of Principal
Tax Benefits
8. In Your Opinion, What Would Be The Optimum Strategy If After You Invest In It? Cut Your Losses And Transfer Funds Into Secure Investments Wait To See If Investment Improves Stock Market Drops Immediately Invest More Funds To Lower Your Losses Expecting Future Growth Withdraw Your Funds And Stop Investing 9. Do You Have Any Other Investment Policy? Yes No 10. Rate The Satisfaction With The Return Generated By Your Investment Option? Highly Satisfied
Satisfied
Neutral
Dissatisfied
Highly Dissatisfied
5
4
3
2
1
Shares Mutual Fund Bonds Debentures Derivatives 11. Rate The Satisfaction With The Factors That Was Considered While Investing? Highly Satisfied 5 Return On
Satisfied
Neutral
Dissatisfied
4
3
2
Investment
Tax Benefits Capital Appreciation Maturity Period Risk Safety Of Principal Liquidity
12. You Are Aware About Following Brokers? Kotak Securities Share Khan Others Angel Broking
13. In Broking What Is More Important For You? Cost Of Broking
Brokers Advice
14. On The Basis Of Your Past Decision Will You Further Invest? Yes No
112
Anand Rathi
Highly Dissatisfied 1
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